As filed with the Securities and Exchange Commission on April 28, 2000
Registration No. 333-69255
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT No. 1
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust: EQUITY SECURITIES TRUST, SERIES 22, HIGH YIELD
SYMPHONY SERIES
B. Name of depositor: ING FUNDS DISTRIBUTOR, INC.
C. Complete address of depositor's principal executive offices:
ING FUNDS DISTRIBUTOR, INC.
1475 Dunwoody Drive
West Chester, Pennsylvania 19380
D. Name and complete address of agent for service:
PETER J. DeMARCO Copy of comments to:
Senior Vice President MICHAEL R. ROSELLA, ESQ.
ING Funds Distributor, Inc. Battle Fowler LLP
1475 Dunwoody Drive 75 East 55th Street
West Chester, Pennsylvania 19380 New York, NY 10022
(212) 856-6858
It is proposed that this filing become effective (check appropriate box)
|_| immediately upon filing pursuant to paragraph (b) of Rule 485
|x| on April 29, 2000 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)
|_| on ( date ) pursuant to paragraph (a) of Rule 485
================================================================================
The Registrant filed a Rule 24f-2 Notice for its fiscal year ended December 31,
1999 on or about March 29, 2000.
935901.1
<PAGE>
- --------------------------------------------------------------------------------
LOGO
- --------------------------------------------------------------------------------
EQUITY SECURITIES TRUST
SERIES 22
HIGH YIELD SYMPHONY SERIES
The Trust is a unit investment trust designated Equity Securities Trust, Series
22, High Yield Symphony Series. The Sponsor is ING Funds Distributor, Inc.
(successor to Reich & Tang Distributors, Inc.). The Trust consists of a fixed,
diversified portfolio of publicly traded common stock of closed-end investment
companies, whose portfolios consist primarily of high-yielding corporate bonds,
debentures and notes. These high yield funds and their weightings in the Trust
portfolio will be selected based upon the recommendations of the portfolio
consultants. The term "high yield" refers to high yield-high risk securities
which are rated below investment grade by recognized rating agencies or are
unrated securities of comparable quality. The Trust seeks to provide high
current income. Capital appreciation is a secondary objective of the Trust. The
Sponsor cannot assure that the Trust will achieve these objectives. The minimum
purchase is 100 Units.
This Prospectus consists of two parts. Part A contains the Summary of Essential
Information including summary material relating to the Trust, the Portfolio and
the Statement of Financial Condition of the Trust. Part B contains more detailed
information about the Trust. Part A may not be distributed unless accompanied by
Part B. Please read and retain both parts of this Prospectus for future
reference.
================================================================================
================================================================================
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
PROSPECTUS DATED APRIL 30, 2000
939813.2
<PAGE>
THE TRUST
OBJECTIVES. The Trust seeks to provide investors with high current income.
Capital appreciation is a secondary objective of the Trust. There is no
guarantee that the objectives of the Trust will be achieved.
PORTFOLIO SELECTION. The Trust seeks to achieve its objectives by investing in a
portfolio of the common stock of closed-end investment companies, the portfolios
of which consist primarily of high-yielding corporate bonds, debentures and
notes. As used herein, the term "Securities" means the common stocks of the high
yield funds initially deposited in the Trust and contracts and funds for the
purchase of such high yield funds, and any additional securities acquired and
held by the Trust pursuant to the provisions of the Indenture.
DESCRIPTION OF PORTFOLIO.* The Portfolio contains issues of domestic common
stock. 100% of the issues are represented by the Sponsor's contracts to
purchase. 98.35% of the Portfolio is listed on the New York Stock Exchange and
1.65% is listed on the American Stock Exchange.
RISK CONSIDERATIONS. Unitholders can lose money by investing in this Trust. The
value of the units, the Securities and the bonds held by the high yield funds
included in the portfolio can each decline in value. An investment in units of
the Trust should be made with an understanding of the following risks:
o The high yield funds which comprise the Securities invest primarily in
high-yielding corporate debt instruments generally rated in the lower
rating categories by nationally recognized rating agencies or in
unrated securities of comparable value. While these lower rated
securities generally offer a higher return potential than higher rated
securities, they also involve greater price volatility and greater
risk of loss of income and principal.
o The high yield funds will receive early returns of principal when
bonds are called or sold before they mature. The funds may not be able
to reinvest the money they receive at as high a yield or as long a
maturity.
o Unitholders will pay both Trust expenses and a share of each high
yield fund's expenses.
o The Securities are shares of closed-end funds which frequently trade
at a discount from their net asset value in the secondary market. The
amount of such discount is subject to change from time to time in
response to various factors.
o A significant number of the high yield funds utilize substantial
leveraging in their portfolios. This leveraging will cause increased
price volatility for those fund's shares, and as a result, increased
volatility for the price of the units of the Trust.
o Since the portfolio of the Trust is fixed and "not managed", in
general the Sponsor can only sell securities at the Trust's
termination or in order to meet redemptions. As a result, the price at
which each security is sold may not be the highest price it attained
during the life of the Trust.
o When cash or a letter of credit is deposited with instructions to
purchase securities in order to create additional units, an increase
in the price of a particular security between the time of deposit and
the time that securities are purchased will cause the units to be
comprised of less of that security and more of the
- ---------------------
* For changes in the Trust Portfolio from January 1, 2000 to March 15, 2000
see Schedule A on page A-7 which reflects the content or "makeup" of the
Trust Portfolio as of March 15, 2000.
939813.2
A-2
<PAGE>
remaining securities. In addition, brokerage fees incurred in
purchasing the Securities will be an expense of the Trust.
o A decline in the value of the Securities during the initial offering
period may require additional Securities to be sold in order to
reimburse the Sponsor for organization costs. This would result in a
decline in value of the units.
PUBLIC OFFERING PRICE. The Public Offering Price per 100 units of the Trust is
calculated by:
o dividing the aggregate value of the underlying securities and cash
held in the Trust by the number of units outstanding;
o adding a sales charge of 4.50% (4.712% of the net amount invested);
and
o multiplying the result by 100.
The price of a single unit, or any multiple thereof, is calculated by dividing
the Public Offering Price per 100 units by 100 and multiplying by the number of
units. Orders involving at least 10,000 units will be entitled to a volume
discount from the Public Offering Price. The Public Offering Price per Unit may
vary on a daily basis in accordance with fluctuations in the aggregate value of
the underlying Securities and each investors purchase price will be computed as
of the date the units are purchased.
DISTRIBUTIONS. Distributions of dividends received, less expenses, will be made
by the Trust on the last business day of every month. The final distribution
will be made within a reasonable period of time after the Trust terminates.
MARKET FOR UNITS. Unitholders may sell their units to the Sponsor or the Trustee
any time, without fee or penalty. However, the Sponsor intends to repurchase
units from unitholders throughout the life of the Trust at prices based upon the
market value of the underlying Securities. However, the Sponsor is not obligated
to maintain a market and may stop doing so without prior notice for any business
reason. If a market is not maintained a unitholder will be able to redeem his
units with the Trustee at the same price. The existence of a liquid trading
market for these Securities may depend on whether dealers will make a market in
these Securities. There can be no assurance of the making or the maintenance of
a market for any of the Securities contained in the portfolio of the Trust or of
the liquidity of the Securities in any markets made. The price at which the
Securities may be sold to meet redemptions and the value of the Units will be
adversely affected if trading markets for the Securities are limited or absent.
TERMINATION. The Trust will terminate in approximately six years. At that time
investors may choose one of the following three options with respect to their
terminating distribution:
o receive the distribution in-kind if they own at least 2,500 Units;
o receive cash upon the liquidation of their pro rata share of the
Securities; or
o reinvest in a subsequent series of the Equity Securities Trust (if one
is offered) at a reduced sales charge.
REINVESTMENT PLAN. Unitholders may elect to automatically reinvest their
distributions, if any (other than the final distribution in connection with the
termination of the Trust) into additional units of the Trust. Investors
purchasing additional units of the Trust by automatically reinvesting their
distributions will not be assessed a sales charge. See "Reinvestment Plan" in
Part B for details on how to enroll in the Reinvestment Plan.
939813.2
A-3
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
As of December 31, 1999:
<TABLE>
<S> <C> <C>
Initial Date of Deposit: March 11, 1999 Minimum Value of Trust: The Trust may be
Aggregate Value of Securities: $ 62,009,846 terminated if the value of the Trust is less than 40% of
Number of Units: 8,330,677 the aggregate value of the Securities at the completion
Fractional Undivided Interest in Trust: 1/8,330,677 of the Deposit Period.
Public Offering Price per 100 Units: Mandatory Termination Date: The earlier of
Net Assets of the Trust................ $ 62,945,934 March 11, 2006 or the disposition of the last Security
Divided By 8,330,677 Units (times 100) $ 755.59 in the Trust.
Plus Sales Charge of 4.50% of Public CUSIP Numbers: Cash: 294762 45 5
Offering Price...................... $ 35.62 Reinvestment: 294762 46 3
Public Offering Price+................. $ 791.21 Trustee: The Chase Manhattan Bank
Sponsor's Repurchase Price And Trustee's Fee: $.74 per 100 Units outstanding
Redemption Price Per 100 Units:++ $ 755.59 Other Fees and Expenses: $.06 per 100 Units outstanding
Evaluation Time: 4:00 p.m. New York Time. Sponsor: ING Funds Distributor, Inc.
Minimum Income or Principal Distribution: Sponsor's Supervisory Fee: Maximum of $.30 per 100
$1.00 per 100 Units Units outstanding (see "Trust Expenses and Charges" in
Liquidation Period: Beginning five days prior to the Part B).
Mandatory Termination Date. Portfolio Consultant: Thomas J. Herzfeld Advisors, Inc.
Rollover Notification Date: March 1, 2006 or another Riccardi Group LLC
date as determined by the Sponsor. Record Dates: Fifteenth day of each month
Distribution Dates: Last business day of each month
</TABLE>
- ---------------
+ On the Initial Date of Deposit there will be no cash in the Income or
Principal Accounts. Anyone purchasing Units after such date will have
included in the Public Offering Price a pro rata share of any cash in such
Accounts.
++ As of the close of the initial offering period, the Sponsor's Repurchase
Price and Redemption Price per 100 Units for the Trust will be reduced to
reflect the payment of the organization costs to the Sponsor.
939813.2
A-4
<PAGE>
FEE TABLE
As of December 31, 1999
This Fee Table is intended to help you to understand the costs and expenses that
you will bear directly or indirectly. See "Public Offering and Trust Expenses
and Charges." Although the Trust is a unit investment trust rather than a mutual
fund, this information is presented to permit a comparison of fees.
Unitholder Transaction Expenses
(Fees paid directly from your investment)
<TABLE>
<CAPTION>
As a % of Amount
Offering per 100
Price Units
--------- -------
<S> <C> <C>
Maximum Sales Charges Imposed on Purchase............................... 4.50% $35.62
Maximum Sales Charge Imposed Per Year on Reinvested Dividends........... 0% $ 0
Estimated Annual Fund Operating Expenses
(Expenses that are deducted from Trust assets)
As a % of Amount
Net per
Assets 100 Units
--------- ---------
Trustee's Fee........................................................... .098% $ .74
Other Operating Expenses................................................ .048% $ .36
Portfolio Supervision, Bookkeeping and Administrative Fees........... .040% $ .30
-------- -------
Total................................................................... .146% $1.10
===== =====
</TABLE>
Example
This Example is intended to help you compare the cost of investing in the Trust
with the cost of investing in other unit trusts.
<TABLE>
<CAPTION>
1 3 5
year years years
<S> <C> <C> <C>
This Example assumes that you invest $10,000 in the Trust for the time periods
indicated, assuming the Trust's estimated operating expense ratio of .146% and a
5% return on the investment throughout the period. Although your actual costs
may behigher or lower, based on these assumptions, your costs would be:................. $464 $495 $529
</TABLE>
The Example does not reflect sales charges on reinvested dividends. The
Example assumes reinvestment of all dividends and distributions and utilizes a
5% annual rate of return as mandated by Securities and Exchange Commission
regulations applicable to mutual funds. The Example should not be considered a
representation of past or future expenses or a annual rate of return; the actual
expenses and annual rate of return may be more or less than those assumed for
purposes of the Example.
939813.2
A-5
<PAGE>
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distributions of Income Distributions of
Units Net Asset Value* During the Period Principal During the
Period Ended Outstanding Per 100 Units (Per 100 Units) Period (Per 100 Units)
------------ ----------- ------------- --------------- ---------------------
<S> <C> <C> <C> <C>
December 31, 1999 8,330,677 $755.59 $78.39 --
</TABLE>
- --------
* Net Asset Value per Unit is calculated by dividing net assets as disclosed
in the "Statement of Net Assets" by the number of Units outstanding as of
the date of the Statement of Net Assets. See Note 5 of Notes to Financial
Statements for a description of the components of Net Assets.
939813.2
A-6
<PAGE>
Schedule A
<TABLE>
<CAPTION>
# Shares Description Market Value % Portfolio
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 767,700 CIGNA HIGH INCOME SHARE $ 4,462,256.25 6.74%
2 191,216 COLONIAL INTERMEDIATE HIGH INCOME FUND 1,051,688.00 1.59%
3 77,850 CONSECO STRATEGIC INCOME FUND 778,500.00 1.18%
4 302,334 CORPORATE HIGH YIELD FUND 2,739,901.88 4.14%
5 115,073 CORPORATE HIGH YIELD FUND II 963,736.38 1.46%
6 104,344 CORPORATE HIGH YIELD FUND III 1,010,832.50 1.53%
7 381,859 DEBT STRATEGIES FUND 2,195,689.25 3.32%
8 832,551 DEBT STRATEGIES FUND II INC. 5,619,719.25 8.49%
9 117,327 DEBT STRATEGIES FUND III INC. 997,279.50 1.51%
10 828,053 DREYFUS HIGH YIELD STRATEGIES FUND 6,986,697.19 10.55%
11 254,961 FRANKLIN UNIVERSAL TRUST 1,641,311.44 2.48%
12 931,844 HIGH INCOME OPPORTUNITY FUND 7,745,953.25 11.70%
13 177,684 HIGH YIELD PLUS FUND 1,132,735.50 1.71%
14 266,807 KEMPER HIGH INCOME TRUST 2,117,780.56 3.20%
15 372,279 MANAGED HIGH YIELD PLUS FUND 3,908,929.50 5.90%
16 365,507 MORGAN STANLEY DEAN WITTER HIGH 1,302,118.69 1.97%
INCOME ADVANTAGE TRUST
17 433,744 MORGAN STANLEY DEAN WITTER HIGH 1,572,322.00 2.37%
INCOME ADVANTAGE TRUST
18 97,583 MORGAN STANLEY HIGH YIELD FUND 1,091,709.81 1.65%
19 85,737 PACHOLDER FUND 1,050,278.25 1.59%
20 305,158 PROSPECT STREET HIGH INCOME PORTFOLIO 2,155,178.38 3.26%
21 91,385 PUTNAM MANAGED HIGH YIELD FUND 891,003.75 1.35%
22 784,609 SALOMAN BROTHERS HIGH INCOME FUND II 8,630,699.00 13.05%
23 697,200 SENIOR HIGH INCOME PORTFOLIO 4,270,350.00 6.45%
24 227,326 VAN KAMPEN HIGH INCOME TRUST 1,022,967.00 1.55%
25 146,652 VAN KAMPEN HIGH INCOME TRUST II 870,746.25 1.32%
----------------------------------
TOTALS $66,210,383.56 100.00%
</TABLE>
939813.2
A-7
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Equity Securities Trust Series 22, High Yield Symphony Series
We have audited the accompanying statement of net assets of Equity Securities
Trust Series 22, High Yield Symphony Series, including the portfolio, as of
December 31, 1999 and the related statement of operations, and changes in net
assets and financial highlights for the period from March 11, 1999 (date of
deposit) to December 31, 1999. These financial statements and financial
highlights are the responsibility of the Trustee. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Equity
Securities Trust, Series 22, High Yield Symphony Series at December 31, 1999,
the results of its operations, changes in its net assets and financial
highlights for the period from March 11, 1999 (date of deposit) to December 31,
1999, in conformity with accounting principles generally accepted in the United
States.
/s/ ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Equity Securities Trust
Series 22
High Yield Symphony Series
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Number
Portfolio of Percentage Cost of Market
No. Shares Name of Issuer of Trust Securities Value (3)
(1) (2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 707,643 Cigna High Income Share 6.13% $5,070,305 $ 3,803,581
2 176,257 Colonial Intermediate High Income Fund 1.47 1,114,705 914,333
3 71,759 Conseco Strategic Income Fund 1.18 912,211 731,045
4 278,681 Corporate High Yield Fund 4.30 3,192,053 2,664,887
5 106,073 Corporate High Yield Fund II 1.64 1,116,233 1,014,323
6 96,183 Corporate High Yield Fund III 1.55 1,147,518 961,830
7 351,989 Debt Strategies Fund 3.44 2,590,758 2,133,933
8 767,425 Debt Strategies Fund II Inc. 8.66 6,173,037 5,371,975
9 108,153 Debt Strategies Fund III Inc. 1.45 965,334 899,022
10 763,279 Dreyfus High Yield Strategies Fund 12.23 8,909,720 7,585,085
11 235,017 Franklin Universal Trust 2.58 2,043,379 1,601,053
12 858,949 High Income Opportunity Fund 11.78 8,657,101 7,301,067
13 163,785 High Yield Plus Fund 1.65 1,199,142 1,023,656
14 241,149 Kemper High Income Trust 2.99 2,137,574 1,853,833
15 343,158 Managed High Yield Plus Fund 6.05 4,120,754 3,753,291
16 336,912 Morgan Stanley Dean Witter High Income 1.77 1,574,847 1,094,964
Advantage Trust
17 399,812 Morgan Stanley Dean Witter High Income 2.22 1,937,597 1,374,354
Advantage Trust II
18 89,949 Morgan Stanley High Yield Fund 1.60 1,295,314 995,061
19 79,033 Pacholder Fund 1.48 1,119,396 918,759
20 281,287 Prospect Street High Income Portfolio 2.81 2,437,393 1,740,463
21 82,241 Putnam Managed High Yield Fund 1.35 1,102,922 837,145
22 723,233 Salomon Brothers High Income Fund II 12.25 8,778,893 7,593,947
23 642,662 Senior High Income Portfolio 6.67 4,944,355 4,137,137
24 209,546 Van Kampen High Income Trust 1.52 1,291,144 942,957
25 132,547 Van Kampen High Income Trust II 1.23 1,056,064 762,145
--------------------------------------------
100.00% $74,887,749 $62,009,846
============================================
See accompanying footnotes to portfolio and notes to financial statements.
</TABLE>
<PAGE>
Equity Securities Trust
Series 22
High Yield Symphony Series
Footnotes to Portfolio
1 Based on the market value of the securities in the Trust.
2. See "Tax Status" in Part B of this Prospectus for a statement of the Federal
tax consequences to a Certificateholder upon the sale or redemption of a
security.
3. At December 31, 1999, the net unrealized depreciation of all the
securities was comprised of the following:
Gross unrealized appreciation $ -
Gross unrealized depreciation (12,877,903)
----------------------
Net unrealized depreciation $ (12,877,903)
======================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust
Series 22
High Yield Symphony Series
Statement of Net Assets
December 31, 1999
Investments in securities, at market value (cost $74,887,749) $ 62,009,846
Other assets
Dividends receivable 532,055
Cash 510,527
Receivable for units sold 1,470,598
---------------
Total other assets 2,513,180
---------------
Liabilities
Payable for securities purchased 1,577,092
---------------
Total liabilities 1,577,092
---------------
Excess of other assets over total liabilities 936,088
---------------
Net assets (8,330,677 units of fractional undivided
interest outstanding, $7.56 per unit) $ 62,945,934
===============
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust
Series 22
High Yield Symphony Series
Statement of Operations
For the period from March 11, 1999 (date of deposit)
to December 31, 1999
Investment income
Dividends $ 4,789,004
Interest 250,538
-----------------
Total income 5,039,542
Expenses
Trustee's fees 31,038
Surveillance fee 13,345
-----------------
Total expenses 44,383
-----------------
Net investment income 4,995,159
-----------------
Realized and unrealized (loss)
Realized gain on investments -
Unrealized (depreciation) on investments (12,877,903)
-----------------
Net (loss) on investments (12,877,903)
-----------------
Net (decrease) in net assets resulting from operations $ (7,882,744)
=================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust
Series 22
High Yield Symphony Series
Statement of Changes in Net Assets
For the period from March 11, 1999 (date of deposit)
to December 31, 1999
Operations
Net investment income $ 4,995,159
Realized gain on investments -
Unrealized (depreciation) on investments (12,877,903)
---------------
Net (decrease) in net assets resulting from operations (7,882,744)
---------------
Distributions to Certificateholders
Investment income 4,117,739
Redemptions
Interest -
Principal -
---------------
Total distributions and redemptions 4,117,739
---------------
Total (decrease) (12,000,483)
Value of additional units acquired during the
offering period to Certificateholders 74,797,198
Net assets
Beginning of period (date of deposit) 149,219
---------------
End of period (including undistributed net investment income
of $877,420) $ 62,945,934
===============
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust
Series 22
High Yield Symphony Series
Financial Highlights
For the period from March 11, 1999 (date of deposit)
to December 31, 1999
Selected data for a unit of the Trust outstanding:*
Net asset value, beginning of period** (date of deposit) $ 9.54
----------
Income 1.21
Expenses (.01)
----------
Net investment income 1.20
----------
Net gain or loss on investments (1) (2.19)
----------
Total from investment operations (.99)
----------
Less distributions
to Certificateholders
Income .99
----------
Total distributions .99
----------
Net asset value, end of period** $ 7.56
==========
(1) Net gain or loss on investments is a result of changes in outstanding units
since March 11, 1999 and the dates of net gain and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the
year of 4,173,162 ([8,330,677 + 15,646]/2) for 1999.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust
Series 22
High Yield Symphony Series
Notes to Financial Statements
December 31, 1999
1. Organization
Equity Securities Trust Series 22, High Yield Symphony Series (the "Trust") was
organized on March 11, 1999 by Reich & Tang Distributors, Inc. under the laws of
the State of New York by a Trust Indenture and Agreement, and is registered
under the Investment Company Act of 1940. The objective of the Trust is to
provide high current income. Capital appreciation is a secondary objective of
the Trust.
Effective February 9, 2000, ING Funds Distributor, Inc. ("ING") has become the
successor sponsor to certain unit investment trusts previously sponsored by
Reich & Tang. As successor sponsor, ING has assumed all of the obligations and
rights of Reich & Tang, the previous sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates. Dividend income is recognized as of the ex-dividend date.
<PAGE>
Equity Securities Trust
Series 22
High Yield Symphony Series
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by The Chase
Manhattan Bank. The market value of the portfolio is based upon the bid prices
for the stocks at the end of the year, which approximates the fair value of the
security at that date, except that the market value on the date of deposit
represents the cost to the Trust based on the offering prices for investments at
that date. The difference between cost and market value is reflected as
unrealized appreciation (depreciation) of investments. Securities transactions
are recorded on the trade date. Realized gains (losses) from securities
transactions are determined on the basis of average cost of the securities sold
or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for dividend distributions once a
month.
<PAGE>
Equity Securities Trust
Series 22
High Yield Symphony Series
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement further requires that proceeds received from
the disposition of securities, other than those securities sold in connection
with the redemption of units, be distributed to Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the period ended December 31, 1999, 0 units were redeemed.
The Trust pays an annual fee for trustee services rendered by the Trustee of
$.74 per 100 units outstanding. A maximum fee of $.30 per 100 units outstanding
is paid to the Sponsor. For the period ended December 31, 1999, the "Trustee's
Fees" amounted to $31,038. Trustee fees also include other expenses of
professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
<TABLE>
<S> <C>
Original cost to Certificateholders $ 149,219
Less initial gross underwriting commission 58,668
-------------
90,551
Cost of additional units acquired during the offering period to
Certificateholders 74,797,198
Accumulated cost of securities sold -
Net unrealized depreciation (12,877,903)
Undistributed net investment income 877,420
Distributions in excess of proceeds from investments 58,668
-------------
$ 62,945,934
=============
</TABLE>
5. Net Assets (continued)
The original cost to Certificateholder, less initial gross underwriting
commission, represents the aggregate initial public offering price net of
applicable sales charge on 15,646 units of fractional undivided interest of the
Trust as of the date of deposit. An additional 8,315,031 units of fractional
undivided interest were issued during the offering period.
<PAGE>
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LOGO
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EQUITY SECURITIES TRUST
SERIES 22
HIGH YIELD SYMPHONY SERIES
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Equity Securities Trust, Series 22, High Yield Symphony
Series is a "unit investment trust ". The Trust was created under the laws of
the State of New York pursuant to a Trust Indenture and Agreement (the "Trust
Agreement "), dated the Initial Date of Deposit, between Reich & Tang
Distributors, Inc., the predecessor to ING Funds Distributor, Inc., as Sponsor,
and The Chase Manhattan Bank, as Trustee.
On the Initial Date of Deposit, the Sponsor deposited securities with the
Trustee, including common stock and funds and delivery statements relating to
contracts for the purchase of certain such securities (collectively, the
"Securities") with an aggregate value as set forth in Part A and cash or an
irrevocable letter of credit issued by a major commercial bank in the amount
required for such purchases. Thereafter the Trustee, in exchange for the
Securities so deposited, has registered on the registration books of the Trust
evidence of the Sponsor's ownership of all Units of the Trust. The Sponsor has a
limited right to substitute other securities in the Trust portfolio in the event
of a failed contract. See "The Trust--Substitution of Securities." The Sponsor
may also, in certain circumstances, direct the Trustee to dispose of certain
Securities if the Sponsor believes that, because of market or credit conditions,
or for certain other reasons, retention of the Security would be detrimental to
Unitholders. See "Trust Administration Portfolio--Supervision."
As of the Initial Date of Deposit, a "Unit" represents an undivided
interest or pro rata share in the Securities and cash of the Trust in the ratio
of one hundred Units for the indicated amount of the aggregate market value of
the Securities initially deposited in the Trust as is set forth in the "Summary
of Essential Information." As additional Units are issued by the Trust as a
result of the deposit of Additional Securities, as described below, the
aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. To the extent that any Units are redeemed by the Trustee, the
fractional undivided interest or pro rata share in such Trust represented by
each unredeemed Unit will increase, although the actual interest in such Trust
represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Unitholders, which may
include the Sponsor, or until the termination of the Trust Agreement.
DEPOSIT OF ADDITIONAL SECURITIES. With the deposit of the Securities in the
Trust on the Initial Date of Deposit, the Sponsor established a proportionate
relationship among the initial aggregate value of specified Securities in the
Trust. During the 90 days subsequent to the Initial Date of Deposit (the
"Deposit Period"), the Sponsor may deposit additional Securities in the Trust
that are substantially similar to the Securities already deposited in the Trust
("Additional Securities"), contracts to purchase Additional Securities or cash
with instructions to purchase Additional Securities, in order to create
additional Units, maintaining to the extent
940432.2
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practicable the original proportionate relationship of the number of shares of
each Security in the Trust portfolio on the Initial Date of Deposit. These
additional Units, which will result in an increase in the number of Units
outstanding, will each represent, to the extent practicable, an undivided
interest in the same number and type of securities of identical issuers as are
represented by Units issued on the Initial Date of Deposit. It may not be
possible to maintain the exact original proportionate relationship among the
Securities deposited on the Initial Date of Deposit because of, among other
reasons, purchase requirements, changes in prices, unavailability of Securities
or the fact that the Trust is prohibited from acquiring more than 3% of the
outstanding voting stock of any High Yield Fund. The composition of the Trust
portfolio may change slightly based on certain adjustments made to reflect the
disposition of Securities and/or the receipt of a stock dividend, a stock split
or other distribution with respect to such Securities, including Securities
received in exchange for shares or the reinvestment of the proceeds distributed
to Unitholders. Deposits of Additional Securities in the Trust subsequent to the
Deposit Period must replicate exactly the existing proportionate relationship
among the number of shares of Securities in the Trust portfolio. Substitute
Securities may be acquired under specified conditions when Securities originally
deposited in the Trust are unavailable (see "The Trust--Substitution of
Securities" below).
OBJECTIVES. The primary objective of the Trust is to seek to provide high
current income. Capital appreciation is a secondary objective of the Trust. The
Trust seeks to achieve its objectives by investing in a portfolio of the common
stock of closed-end investment companies, the portfolios of which (under normal
market conditions) have at least 65% of their assets in high-yielding corporate
bonds, debentures and notes. In addition, a portion of the remaining percentage
of some of the investment companies' portfolios may be invested in common stock
or other equity related securities, including convertible securities, preferred
stock, warrants and rights (see "The Trust--The Securities" below). As used
herein, the term "Securities" means the stocks initially deposited in the Trust
and described in "Portfolio" in Part A and any additional stocks acquired and
held by the Trust pursuant to the provisions of the Indenture. All of the
Securities in the Trust are listed on the New York Stock Exchange, the American
Stock Exchange or the National Association of Securities Dealers Automated
Quotations ("NASDAQ") National Quotation Market System.
The Trust will terminate in approximately six years, at which time
investors may choose to either receive the distributions in kind (if they own at
least 2,500 Units), in cash or reinvest in a subsequent series of Equity
Securities Trust (if offered) at a reduced sales charge. The Trust is intended
to be an investment which should be held by investors for the full term of the
Trust and not be used as a trading vehicle. Since the Sponsor may deposit
additional Securities in connection with the sale of additional Units, the
yields on these Securities may change subsequent to the Initial Date of Deposit.
Further, the Securities may appreciate or depreciate in value, dependent upon
the full range of economic and market influences affecting corporate
profitability, the financial condition of issuers (including non-U.S. issuers)
and the prices of equity securities in general and the Securities in particular.
Therefore, there is no guarantee that the objectives of the Trust will be
achieved.
THE SECURITIES. Each of the Securities in the Portfolio of the Trust is a
closed-end mutual fund (the "High Yield Funds") that invests primarily in
high-yielding corporate bonds, debentures and notes. Each High Yield Fund is
analyzed by the Portfolio Consultants based on the underlying characteristics of
its individual holdings. Diligent research is vital to the success of any mutual
fund. Careful attention has been paid to the individual investments that each
High Yield Fund has under management in order to reduce the Trust's exposure to
early bond calls and under-performing securities that would have the effect of
diluting the Trust's current income. Each security within a potential fund
purchase is evaluated by the Portfolio Consultants for its credit quality and
call risk probability. In addition, all potential investments are evaluated
based upon the experience of each funds' portfolio manager in various economic
and interest rate cycles.
Out of the universe of 35 high-yield, closed-end funds, the selection
process narrows the field to a group of 25 funds that meet the criteria of
stable performance, and are consistent with the Trust's objectives. By employing
an investment strategy that will require the Trust to invest in a series of
funds, investors will be diversified across a wide spectrum of debt and equity
issues, thereby reducing the exposure to any single issuer of corporate debt
and/or equity, or any single portfolio manager.
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The Trustee has not participated and will not participate in the selection
of Securities for the Trust, and neither the Sponsor, the Portfolio Consultants
nor the Trustee will be liable in any way for any default, failure or defect in
any Securities.
SUBSTITUTION OF SECURITIES. In the event of a failure to deliver any
Security that has been purchased for the Trust under a contract ("Failed
Securities"), the Sponsor is authorized under the Trust Agreement to direct the
Trustee to acquire other securities ("Substitute Securities") to make up the
original corpus of the Trust.
The Substitute Securities must be purchased within 20 days after the
delivery of the notice of the failed contract. Where the Sponsor purchases
Substitute Securities in order to replace Failed Securities, the purchase price
may not exceed the purchase price of the Failed Securities and the Substitute
Securities must be substantially similar to the Securities originally contracted
for and not delivered.
Whenever a Substitute Security has been acquired for the Trust, the Trustee
shall, within five days thereafter, notify all Unitholders of the Trust of the
acquisition of the Substitute Security and the Trustee shall, on the next
Distribution Date which is more than 30 days thereafter, make a pro rata
distribution of the amount, if any, by which the cost to the Trust of the Failed
Security exceeded the cost of the Substitute Security plus accrued interest, if
any.
In the event no substitution is made, the proceeds of the sale of
Securities will be distributed to Unitholders as set forth under "Rights of
Unitholders -- Distributions." In addition, if the right of substitution shall
not be utilized to acquire Substitute Securities in the event of a failed
contract, the Sponsor will cause to be refunded the sales charge attributable to
such Failed Securities to all Unitholders, and distribute the principal and
dividends, if any, attributable to such Failed Securities on the next
Distribution Date.
RISK CONSIDERATIONS
CLOSED-END FUNDS. The value of your units may increase or decrease
depending on the value of the underlying shares of the High Yield Funds in the
Trust's portfolio. The High Yield Funds are closed-end investment companies with
managed portfolios. Shares of closed-end funds frequently trade at a discount
from net asset value. However, a fund's articles of incorporation may contain
certain anti-takeover provisions that may have the effect of inhibiting the
fund's possible conversion to open-end status and limiting the ability of other
persons to acquire control of the fund. In certain circumstances, these
provisions might also inhibit the ability of stockholders (including the Trust)
to sell their shares at a premium over prevailing market prices. This
characteristic is a risk separate and distinct from the risk that the fund's net
asset value will decrease. In particular, this characteristic would increase the
loss or reduce the return on the sale of those High Yield Funds whose shares
were purchased by the Trust at a premium. As of the business day prior to the
initial date of deposit, 40.25% of the High Yield Funds included in the Trust's
portfolio were trading at a premium. Should any of the High Yield Funds convert
to open-end status, the Trust will retain such shares unless a determination is
made that the retention of such shares would be detrimental to the Trust. In the
unlikely event that a Fund converts to open-end status at a time when its shares
are trading at a premium there would be an immediate loss in value to the Trust
since shares of open-end funds trade at net asset value. In addition, to the
extent that the converted Fund creates additional shares when interest rates
have declined and invests in lower yielding securities, the Trust may experience
a reduction of the average yield of its retained shares in that Fund caused by
the acquisition of lower coupon investments. Certain of the High Yield Funds may
have in place or may put in place in the future plans pursuant to which the Fund
may repurchase its own shares in the marketplace. Typically, these plans are put
in place in an attempt by the Fund's board to reduce a discount on its share
price. To the extent such a plan was implemented and shares owned by the Trust
are repurchased by the Fund, the Trust position in that Fund would be reduced
and the cash would be deposited in the Trust's Principal Account and distributed
to Unitholders at the next applicable Distribution Date. Similarly, in the event
that the Trust does not retain shares of a Fund which converted to open-end
status, the Trust position in that Fund would be eliminated and the cash
distributed to Unitholders.
940432.2
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<PAGE>
Shares of many High Yield Funds are thinly traded, and therefore may be
more volatile and subject to greater price fluctuations because of the Sponsor's
buying and selling securities than shares with greater liquidity. Investors
should be aware that there can be no assurance that the value of the Securities
in the Trust's Portfolio will increase or that the issuers of those Securities
will pay dividends on outstanding shares. Any distributions of income to
Unitholders will generally depend on the declaration of dividends by the issuers
of the underlying stocks, and the declaration of dividends depends on several
factors including the financial condition of the issuers included in the
portfolios of those Securities and general economic conditions.
LOWER GRADE SECURITIES. The High Yield Funds in the Trust portfolio may
invest primarily in lower grade securities. There are certain risks associated
with the High Yield Funds' investments in such securities that could cause the
value of these funds to decrease. This, in turn, could cause the value of your
Units to decrease. The risks are outlined below.
Lower grade securities are regarded as being predominately speculative as
to the issuer's ability to make payments of principal and interest. Investment
in such securities involves substantial risk. Lower grade securities are
commonly referred to as "junk bonds." Issuers of lower grade securities may be
highly leveraged and may not have available to them more traditional methods of
financing. Therefore, the risks associated with acquiring the securities of such
issuers generally are greater than is the case with higher-rated securities. For
example, during an economic downturn or a sustained period of rising interest
rates, issuers of lower grade securities may be more likely to experience
financial stress, especially if such issuers are highly leveraged. During
periods of economic downturn, such issuers may not have sufficient revenues to
meet their interest payment obligations. The issuer's ability to make payments
on its debt obligations also may be adversely affected by specific issuer
developments, the issuer's inability to meet specific projected business
forecasts or the unavailability of additional financing. Therefore, there can be
no assurance that in the future there will not exist a higher default rate
relative to the rates currently existing in the market for lower grade
securities.
The risk of loss due to default by the issuer is significantly greater for
the holders of lower grade securities because such securities may be unsecured
and may be subordinate to other creditors of the issuer. Other than with respect
to distressed securities, discussed below, the lower grade securities in which
the High Yield Funds may invest do not include instruments which, at the time of
investment, are in default or the issuers of which are in bankruptcy. However,
there can be no assurance that such events will not occur after a High Yield
Fund purchases a particular security, in which case the High Yield Fund and the
Trust may experience losses and incur costs.
Lower grade securities frequently have call or redemption features that
would permit an issuer to repurchase the security from one of the High Yield
Funds which holds it. If a call were exercised by the issuer during a period of
declining interest rates, the particular High Yield Fund is likely to have to
replace such called security with a lower yielding security, thus decreasing the
net investment income to the High Yield Fund and the Trust and dividends to
Unitholders.
Lower grade securities tend to be more volatile than higher-rated
fixed-income securities, so that adverse economic events may have a greater
impact on the prices of lower grade securities than on higher-rated fixed-
income securities. Factors adversely affecting the market value of such
securities are likely to adversely affect a High Yield Fund's net asset value
which, in turn, may adversely affect the value of your Units. Recently, demand
for lower grade securities has increased significantly and the difference
between the yields paid by lower grade securities and investment grade bonds
(i.e., the "spread") has narrowed. To the extent this differential increases,
the value of lower grade securities in a High Yield Fund's portfolio could be
adversely affected along with the value of your Units.
Like higher-rated fixed-income securities, lower grade securities generally
are purchased and sold through dealers who make a market in such securities for
their own accounts. However, there are fewer dealers in the lower grade
securities market, which market may be less liquid than the market for
higher-rated fixed-income securities, even under normal economic conditions.
Also, there may be significant disparities in the prices quoted for lower
940432.2
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<PAGE>
grade securities by various dealers. As a result, during periods of high demand
in the lower grade securities market, it may be difficult to acquire lower grade
securities appropriate for investment by the High Yield Funds. Adverse economic
conditions and investor perceptions thereof (whether or not based on economic
reality) may impair liquidity in the lower grade securities market and may cause
the prices a High Yield Fund receives for its lower grade securities to be
reduced. In addition, a High Yield Fund may experience difficulty in liquidating
a portion of its portfolio when necessary to meet its liquidity needs or in
response to a specific economic event such as deterioration in the
creditworthiness of the issuers. Under such conditions, judgment may play a
greater role in valuing certain of a High Yield Fund's portfolio instruments
than in the case of instruments trading in a more liquid market. Moreover, a
High Yield Fund may incur additional expenses to the extent that it is required
to seek recovery upon a default on a portfolio holding or to participate in the
restructuring of the obligation.
DISTRESSED SECURITIES. The High Yield Funds may invest a portion of their
total assets in "Distressed Securities" which are securities that are:
o the subject of bankruptcy proceedings or otherwise in default as to
the repayment of principal and/or payment of interest at the time of
acquisition
o rated in the lower rating categories (Ca or lower by Moody's and CC or
lower by S&P), or
o if unrated, are in the opinion of the High Yield Fund's investment
advisor of equivalent quality.
An investment in Distressed Securities is speculative and involves significant
risk. Distressed Securities frequently do not produce income while they are
outstanding and may require the Fund to bear certain extraordinary expenses in
order to protect and recover its investment. Therefore, to the extent the Trust
pursues its secondary objective of capital growth through a High Yield Fund's
investment in Distressed Securities, the Trust's ability to achieve current
income for you may be diminished.
DILUTION. The Trust is prohibited from subscribing to a rights offering for
shares of any of the High Yield Funds. In the event of a rights offering for
additional shares of a High Yield Fund, Unitholders should expect that the Trust
will, at the completion of the offer, own a smaller proportional interest in
such Fund that would otherwise be the case. It is not possible to determine the
extent of this dilution in share ownership without knowing what proportion of
the shares in a rights offering will be subscribed.
This may be particularly serious when the subscription price per share for
the offer is less than the High Yield Fund's net asset value per share. Assuming
that all rights are exercised and there is no change in the net asset value per
share, the aggregate net asset value of each shareholder's shares of common
stock should decrease as a result of the offer. If a High Yield Fund's
subscription price per share is below that Fund's net asset value per share at
the expiration of the offer, shareholders would experience an immediate dilution
of the aggregate net asset value of their shares of common stock as a result of
the offer, which could be substantial.
The Trust may transfer or sell its rights to purchase additional shares of
a High Yield Fund to the extent permitted by the terms of that Fund's rights
offering. The cash the Trust receives from transferring your rights might serve
as partial compensation for any possible dilution of the Trust's interest in the
Fund. There can be no assurance, however, that the rights will be transferable
or that a market for the rights will develop or the value, if any, that such
rights will have.
LEVERAGE. The use of leverage by the High Yield Funds creates an
opportunity for increased net income and capital growth for their shares, but,
also creates special risks. There can be no assurance that a leveraging strategy
will be successful during any period in which it is employed. The High Yield
Funds may use leverage to provide their shareholders with a potentially higher
return. Leverage creates risks for shareholders including the likelihood of
greater volatility of net asset value and market price of the shares and the
risk that fluctuations in
940432.2
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<PAGE>
interest rates on borrowing and debt or in the dividend rates on any preferred
shares may affect the return to shareholders.
To the extent the income or capital growth derived from securities
purchased with funds received from leverage exceeds the cost of leverage, a High
Yield Fund's return will be greater than if leverage had not been used.
Conversely, if the income or capital growth from the securities purchased with
such funds is not sufficient to cover the cost of leverage, the return to a High
Yield Fund will be less than if leverage had not been used, and therefore the
amount available for distribution to shareholders as dividends and other
distributions will be reduced. This would, in turn, reduce the amount available
for distribution to you as a Unitholder.
FOREIGN SECURITIES. Certain High Yield Funds may invest all or a portion of
their assets in securities of issuers domiciled outside of the United States or
that are denominated in various foreign currencies and multinational foreign
currency units. Investing in securities of foreign entities and securities
denominated in foreign currencies involves certain risks not involved in
domestic investments, including, but not limited to:
o fluctuations in foreign exchange rates
o future foreign political and economic developments, and
o different legal systems and possible imposition of exchange controls
or other foreign government laws or restrictions.
Securities prices in different countries are subject to different economic,
financial, political and social factors. Since the High Yield Funds may invest
in securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates may affect the value of securities in
the High Yield Funds and the unrealized appreciation or depreciation of
investments. Currencies of certain countries may be volatile and therefore may
affect the value of securities denominated in such currencies. In addition, with
respect to certain foreign countries, there is the possibility of expropriation
of assets, confiscatory taxation, difficulty in obtaining or enforcing a court
judgment, economic, political or social instability or diplomatic developments
that could affect investments in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross domestic product, rates of inflation, capital
reinvestment, resources, self-sufficiency and balance of payments position.
Certain foreign investments also may be subject to foreign withholding taxes.
These risks often are heightened for investments in smaller, emerging capital
markets. Finally, accounting, auditing and financial reporting standards in
foreign countries are not necessarily equivalent to U.S. standards and therefore
disclosure of certain material information may not be made.
Beginning on January 1, 1999, the Euro was introduced as the new, single
European currency by eleven European Monetary Union member countries. These
countries are Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal and Spain. The Euro may result in
uncertainties and disruptions for securities of European companies and European
financial markets which could adversely affect the Trust. At this time, the
Sponsor cannot predict what impact the Euro will have.
VOTING. In regard to the voting of all proxies with respect to a High Yield
Fund, the Sponsor has instructed the Trustee to vote the shares held by the
Trust in the same proportion as the vote of all other holders of the shares of
such High Yield Fund. With respect to rights offering, as described in the
Dilution section above, the Trust may not accept any additional securities of
the High Yield Funds.
FIXED PORTFOLIO. The value of the Units will fluctuate depending on all of
the factors that have an impact on the economy and the equity markets. These
factors similarly impact the ability of an issuer to distribute dividends.
Unlike a managed investment company in which there may be frequent changes in
the portfolio of securities based upon economic, financial and market analyses,
securities of a unit investment trust, such as the Trust, are not subject to
such frequent changes based upon continuous analysis. All the Securities in the
Trust are
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liquidated or distributed during the Liquidation Period. Since the Trust will
not sell Securities in response to ordinary market fluctuation, and only at the
Trust's termination, the amount realized upon the sale of the Securities may not
be the highest price attained by an individual Security during the life of the
Trust. Some of the Securities in the Trust may also be owned by other clients of
the Sponsor and their affiliates. However, because these clients may have
differing investment objectives, the Sponsor may sell certain Securities from
those accounts in instances where a sale by the Trust would be impermissible,
such as to maximize return by taking advantage of market fluctuations. Investors
should consult with their own financial advisers prior to investing in the Trust
to determine its suitability. (See "Trust Administration--Portfolio Supervision"
below.)
ADDITIONAL SECURITIES. Investors should be aware that in connection with
the creation of additional Units subsequent to the Initial Date of Deposit, the
Sponsor may deposit Additional Securities, contracts to purchase Additional
Securities or cash with instructions to purchase Additional Securities, in each
instance maintaining the original proportionate relationship, subject to
adjustment under certain circumstances, of the numbers of shares of each
Security in the Trust. Subject to regulatory approval, to the extent the price
of a Security increases or decreases between the time cash is deposited with
instructions to purchase the Security and the time the cash is used to purchase
the Security, Units may represent less or more of that Security and more or less
of the other Securities in the Trust. In addition, brokerage fees (if any)
incurred in purchasing Securities with cash deposited with instructions to
purchase the Securities will be an expense of the Trust.
Price fluctuations between the time of deposit and the time the Securities
are purchased, and payment of brokerage fees, will affect the value of every
Unitholder's Units and the Income per Unit received by the Trust. In particular,
Unitholders who purchase Units during the initial offering period would
experience a dilution of their investment as a result of any brokerage fees paid
by the Trust during subsequent deposits of Additional Securities purchased with
cash deposited. In order to minimize these effects, the Trust will try to
purchase Securities as near as possible to the Evaluation Time or at prices as
close as possible to the prices used to evaluate Trust Units at the Evaluation
Time.
In addition, subsequent deposits to create such additional Units will not
be covered by the deposit of a bank letter of credit. In the event that the
Sponsor does not deliver cash in consideration for the additional Units
delivered, the Trust may be unable to satisfy its contracts to purchase the
Additional Securities without the Trustee selling underlying Securities.
Therefore, to the extent that the subsequent deposits are not covered by a bank
letter of credit, the failure of the Sponsor to deliver cash to the Trust, or
any delays in the Trust receiving such cash, would have significant adverse
consequences for the Trust.
COMMON STOCK. Since the Trust contains primarily common stocks of domestic
issuers, an investment in Units of the Trust should be made with an
understanding of the risks inherent in any investment in common stocks including
the risk that the financial condition of the issuers of the Securities may
become impaired. Additional risks include risks associated with the right to
receive payments from the issuer which is generally inferior to the rights of
creditors of, or holders of debt obligations or preferred stock issued by the
issuer. Holders of common stocks have a right to receive dividends only when,
if, and in the amounts declared by the issuer's board of directors and to
participate in amounts available for distribution by the issuer only after all
other claims on the issuer have been paid or provided for. By contrast, holders
of preferred stocks usually have the right to receive dividends at a fixed rate
when and as declared by the issuer's board of directors, normally on a
cumulative basis. Dividends on cumulative preferred stock must be paid before
any dividends are paid on common stock and any cumulative preferred stock
dividend which has been omitted is added to future dividends payable to the
holders of such cumulative preferred stock. Preferred stocks are also usually
entitled to rights on liquidation which are senior to those of common stocks.
For these reasons, preferred stocks generally entail less risk than common
stocks.
YEAR 2000 ISSUE. Many existing computer programs use only two digits to
identify a year in the date field and were designed and developed without
considering the impact of the upcoming change in the century. Therefore, for
example, the year "2000" would be incorrectly identified as the year "1900". If
not corrected, many computer applications could fail or create erroneous results
by or at the Year 2000, requiring substantial resources
940432.2
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to remedy. The Sponsor and Trustee believe that the "Year 2000" problem is
material to their business and operations and could have a material adverse
effect on the Sponsor's and the Trustee's results of operations and, in turn,
cash available for distribution by the Trustee. Although the Sponsor and the
Trustee are addressing the problem with respect to their business operations,
there can be no assurance that the Year 2000 problem will be properly or timely
resolved. The Year 2000 problem may also adversely affect issuers of the
Securities contained in the Trust to varying degrees based upon various factors.
The Sponsor is unable to predict what effect, if any, the Year 2000 problem will
have on such issuers.
LEGISLATION. At any time after the Initial Date of Deposit, legislation may
be enacted, affecting the Securities in the Trust or the issuers of the
Securities. Changing approaches to regulation, particularly with respect to the
environment or with respect to the petroleum industry, may have a negative
impact on certain companies represented in the Trust. There can be no assurance
that future legislation, regulation or deregulation will not have a material
adverse effect on the Trust or will not impair the ability of the issuers of the
Securities to achieve their business goals.
LEGAL PROCEEDINGS AND LITIGATION. At any time after the Initial Date of
Deposit, legal proceedings may be initiated on various grounds, or legislation
may be enacted, with respect to the Securities in the Trust or to matters
involving the business of the issuer of the Securities. There can be no
assurance that future legal proceedings or legislation will not have a material
adverse impact on the Trust or will not impair the ability of the issuers of the
Securities to achieve their business and investment goals.
PUBLIC OFFERING
OFFERING PRICE. In calculating the Public Offering Price, the aggregate
value of the Securities is determined in good faith by the Trustee on each
"Business Day" as defined in the Indenture in the following manner: because the
Securities are listed on a national securities exchange, this evaluation is
based on the closing sale prices on that exchange as of the Evaluation Time
(unless the Trustee deems these prices inappropriate as a basis for valuation).
If the Trustee deems these prices inappropriate as a basis for evaluation, then
the Trustee may utilize, at the Trust's expense, an independent evaluation
service or services to ascertain the values of the Securities. The independent
evaluation service shall use any of the following methods, or a combination
thereof, which it deems appropriate: (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the Securities on the bid
side of the market or by such other appraisal deemed appropriate by the Trustee
or (c) by any combination of the above, each as of the Evaluation Time.
VOLUME AND OTHER DISCOUNTS. Units are available at a volume discount from
the Public Offering Price based upon the number of Units purchased. This volume
discount will result in a reduction of the sales charge applicable to such
purchases. The approximate reduced sales charge on the Public Offering Price
applicable to such purchases is as follows:
APPROXIMATE
REDUCED
SALES
NUMBER OF UNITS CHARGE
--------------- -----------
10,000 but less than 25,000..... 4.25%
25,000 but less than 50,000..... 4.00%
50,000 but less than 75,000..... 3.50%
75,000 but less than 100,000.... 3.00%
For transactions of 100,000 Units or more, the Sponsor intends to negotiate
the applicable sales charge and such charge will be disclosed to any such
purchaser. The Sponsor reserves the right to change the discounts from time to
time.
940432.2
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<PAGE>
These discounts will apply to all purchases of Units by the same purchaser.
Units purchased by the same purchasers in separate transactions will be
aggregated for purposes of determining if such purchaser is entitled to a
discount provided that such purchaser must own at least the required number of
Units at the time such determination is made. Units held in the name of the
spouse of the purchaser or in the name of a child of the purchaser under 21
years of age are deemed for the purposes hereof to be registered in the name of
the purchaser. The discount is also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.
The holders of units of prior series of Equity Securities Trusts (the
"Prior Series") may "rollover" into this Trust by exchanging units of the Prior
Series for Units of the Trust at their relative net asset values, subject to a
reduced sales charge of 3.50%. An exchange of a Prior Series for Units of the
Trust will generally be a taxable event. The rollover option described herein
will also be available to investors in the Prior Series who elect to purchase
Units of the Trust within 60 days of their liquidation of units in the Prior
Series (see "Trust Termination").
Employees (and their immediate families) of ING Funds Distributor, Inc.
(and its affiliates), the Portfolio Consultants and of the special counsel to
the Sponsor, may, pursuant to employee benefit arrangements, purchase Units of
the Trust at a price equal to the aggregate value of the underlying securities
in the Trust divided by the number of Units outstanding (without a sales
charge). Such arrangements result in less selling effort and selling expenses
than sales to employee groups of other companies. Resales or transfers of Units
purchased under the employee benefit arrangements may only be made through the
Sponsor's secondary market, so long as it is being maintained, and not through
other broker-dealers.
Investors in any open-end management investment company or unit investment
trust that have purchased their investment within a five-year period prior to
the date of this Prospectus can purchase Units of the Trust in an amount not
greater in value than the amount of said investment made during this five-year
period at a reduced sales charge of 3.50% of the public offering price.
Units may be purchased (including purchases by Rollover Unitholders) at the
Public Offering Price (for purchases which do not qualify for a volume discount)
less the concession the Sponsor typically allows to brokers and dealers for
purchases (see "Public Offering--Distribution of Units") by (1) investors who
purchase Units through registered investment advisers, certified financial
planners and registered broker-dealers who in each case either charge periodic
fees for financial planning, investment advisory or asset management service, or
provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed, (2) bank trust
departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, custodial or
similar capacity, (3) any person who, for at least 90 days, has been an officer,
director or bona fide employee of any firm offering Units for sale to investors
or their immediate family members (as described above) and (4) officers and
directors of bank holding companies that make Units available directly or
through subsidiaries or bank affiliates. Notwithstanding anything to the
contrary in this Prospectus, such investors, bank trust departments, firm
employees and bank holding company officers and directors who purchase Units
through this program will not receive the volume discount.
DISTRIBUTION OF UNITS. During the initial offering period and thereafter to
the extent additional Units continue to be offered by means of this Prospectus,
Units will be distributed by the Sponsor and dealers at the Public Offering
Price. The initial offering period is thirty days after each deposit of
Securities in the Trust and the Sponsor may extend the initial offering period
for successive thirty day periods. Certain banks and thrifts will make Units of
the Trust available to their customers on an agency basis. A portion of the
sales charge paid by their customers is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Units;
however, the Glass-Steagall Act does permit certain agency transactions and the
banking regulators have indicated that these particular agency transactions are
permitted under such Act. On November 16, 1999, President Clinton signed the
Gramm-Leach-Bliley Act, repealing certain provisions of the Glass-Steagall Act
which have restricted affiliation between banks and securities firms and
amending the Bank Holding Company Act thereby removing restrictions on banks and
insurance companies. The new legislation grants banks new authority to conduct
certain authorized activity through financial subsidiaries. State securities
laws on this issue may differ from
940432.2
B-9
<PAGE>
the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
The Sponsor presently maintains and intends to continue to qualify the
Units for sale in substantially all States through dealers who are members of
the National Association of Securities Dealers, Inc. Units may be sold to
dealers at prices which represent a concession of up to 4.0% per Unit, subject
to the Sponsor's right to change the dealers' concession from time to time. Such
Units may then be distributed to the public by the dealers at the Public
Offering Price then in effect. The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units.
Broker-dealers of the Trust, banks and/or others are eligible to
participate in a program in which such firms receive from the Sponsor a nominal
award for each of their registered representatives who have sold a minimum
number of units of unit investment trusts created by the Sponsor during a
specified time period. In addition, at various times the Sponsor may implement
other programs under which the sales forces of brokers, dealers, banks and/or
others may be eligible to win other nominal awards for certain sales efforts or
under which the Sponsor will allow to any such brokers, dealers, banks and/or
others that sponsor sales contests or recognition programs conforming to
criteria established by the Sponsor, or participate in sales programs sponsored
by the Sponsor, an amount not exceeding the total applicable sales charges on
the sales generated by such person at the public offering price during such
programs. Also, the Sponsor in its discretion may from time to time pursuant to
objective criteria established by the Sponsor pay fees to qualifying brokers,
dealers, banks and/or others for certain services or activities which are
primarily intended to result in sales of Units of the Trust. Such payments are
made by the Sponsor out of its own assets and not out of the assets of the
Trust. These programs will not change the price Unitholders pay for their Units
or the amount that the Trust will receive from the Units sold.
SPONSOR'S PROFITS. The Sponsor will receive a combined gross underwriting
commission equal to up to 4.50% of the Public Offering Price per 100 Units
(equivalent to 4.712% of the net amount invested in the Securities).
Additionally, the Sponsor may realize a profit on the deposit of the Securities
in the Trust representing the difference between the cost of the Securities to
the Sponsor and the cost of the Securities to the Trust (See "Portfolio"). The
Sponsor may realize profits or sustain losses with respect to Securities
deposited in the Trust which were acquired from underwriting syndicates of which
they were a member. All or a portion of the Securities initially deposited in
the Trust may have been acquired through the Sponsor.
During the initial offering period and thereafter to the extent additional
Units continue to be offered by means of this Prospectus, the Underwriter may
also realize profits or sustain losses as a result of fluctuations after the
Initial Date of Deposit in the aggregate value of the Securities and hence in
the Public Offering Price received by the Sponsor for the Units. Cash, if any,
made available to the Sponsor prior to settlement date for the purchase of Units
may be used in the Sponsor's business subject to the limitations of 17 CFR
240.15c3-3 under the Securities Exchange Act of 1934 and may be of benefit to
the Sponsor.
Both upon acquisition of Securities and termination of the Trust, the
Trustee may utilize the services of the Sponsor for the purchase or sale of all
or a portion of the Securities in the Trust. The Sponsor may receive brokerage
commissions from the Trust in connection with such purchases and sales in
accordance with applicable law.
In maintaining a market for the Units (see "Sponsor Repurchase") the
Sponsor will realize profits or sustain losses in the amount of any difference
between the price at which it buys Units and the price at which it resells such
Units.
RIGHTS OF UNITHOLDERS
OWNERSHIP OF UNITS. Ownership of Units of the Trust will not be evidenced
by certificates. All evidence of ownership of the Units will be recorded in
book-entry form at the Depository Trust Company ( "DTC ")
940432.2
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<PAGE>
through an investor's brokerage account. Units held through DTC will be
deposited by the Sponsor with DTC in the Sponsor's DTC account and registered in
the nominee name CEDE & COMPANY. Individual purchases of beneficial ownership
interest in the Trust may be made in book-entry form through DTC. Ownership and
transfer of Units will be evidenced and accomplished directly and indirectly by
book-entries made by DTC and its participants. DTC will record ownership and
transfer Units among DTC participants and forward all notices and credit all
payments received in respect of the Units held by the DTC participants.
Beneficial owners of Units will receive written confirmation of their purchases
and sales from the broker-dealer or bank from whom their purchase was made.
Units are transferable by making a written request property accompanied by a
written instrument or instruments of transfer which should be sent registered or
certified mail for the protection of the Unitholder. Holders must sign such
written request exactly as their names appear on the records of the Trust. Such
signatures must be guaranteed by a commercial bank or trust company, savings and
loan association or by a member firm of a national securities exchange.
DISTRIBUTIONS. Dividends received by the Trust are credited by the Trustee
to an Income Account for the Trust. Other receipts, including the proceeds of
Securities disposed of, are credited to a Principal Account for the Trust.
Distributions to each Unitholder from the Income Account are computed as of
the close of business on each Record Date for the following payment date and
consist of an amount substantially equal to such Unitholder's pro rata share of
the income credited to the Income Account, less expenses. Distributions from the
Principal Account of the Trust (other than amounts representing failed
contracts, as previously discussed) will be computed as of each Record Date, and
will be made to the Unitholders of the Trust on or shortly after the
Distribution Date. Proceeds representing principal received from the disposition
of any of the Securities between a Record Date and a Distribution Date which are
not used for redemptions of Units will be held in the Principal Account and not
distributed until the next Distribution Date. Persons who purchase Units between
a Record Date and a Distribution Date will receive their first distribution on
the Distribution Date after such purchase.
As of each Record Date, the Trustee will deduct from the Income Account of
the Trust, and, to the extent funds are not sufficient therein, from the
Principal Account of the Trust, amounts necessary to pay the expenses of the
Trust (as determined on the basis set forth under "Trust Expenses and Charges").
The Trustee also may withdraw from said accounts such amounts, if any, as it
deems necessary to establish a reserve for any applicable taxes or other
governmental charges that may be payable out of the Trust. Amounts so withdrawn
shall not be considered a part of such Trust's assets until such time as the
Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
The dividend distribution per 100 Units, if any, cannot be anticipated and
may be paid as Securities are redeemed, exchanged or sold, or as expenses of the
Trust fluctuate. No distribution need be made from the Income Account or the
Principal Account until the balance therein is an amount sufficient to
distribute $1.00 per 100 Units.
RECORDS. The Trustee shall furnish Unitholders in connection with each
distribution a statement of the amount of dividends and interest, if any, and
the amount of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per 100 Units. Within a reasonable time after the
end of each calendar year, the Trustee will furnish to each person who at any
time during the calendar year was a Unitholder of record, a statement showing
(a) as to the Income Account: dividends, interest and other cash amounts
received, amounts paid for purchases of Substitute Securities and redemptions of
Units, if any, deductions for applicable taxes and fees and expenses of the
Trust, and the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each 100 Units outstanding on the last business day of such
calendar year; (b) as to the Principal Account: the dates of disposition of any
Securities and the net proceeds received therefrom, deductions for payments of
applicable taxes and fees and expenses of the Trust, amounts paid for purchases
of Substitute Securities and redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed both as a total
dollar amount and as a dollar amount representing
940432.2
B-11
<PAGE>
the pro rata share of each 100 Units outstanding on the last business day of
such calendar year; (c) a list of the Securities held, a list of Securities
purchased, sold or otherwise disposed of during the calendar year and the number
of Units outstanding on the last business day of such calendar year; (d) the
Redemption Price per 100 Units based upon the last computation thereof made
during such calendar year; and (e) amounts actually distributed to Unitholders
during such calendar year from the Income and Principal Accounts, separately
stated, of the Trust, expressed both as total dollar amounts and as dollar
amounts representing the pro rata share of each 100 Units outstanding on the
last business day of such calendar year.
The Trustee shall keep available for inspection by Unitholders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee, including records of the names and addresses of
Unitholders, a current list of Securities in the portfolio and a copy of the
Trust Agreement.
LIQUIDITY
SPONSOR REPURCHASE. Unitholders who wish to dispose of their Units should
inquire of the Sponsor as to current market prices prior to making a tender for
redemption. The aggregate value of the Securities will be determined by the
Trustee on a daily basis and computed on the basis set forth under "Trustee
Redemption." The Sponsor does not guarantee the enforceability, marketability or
price of any Securities in the Portfolio or of the Units. The Sponsor may
discontinue the repurchase of Units if the supply of Units exceeds demand, or
for other business reasons. The date of repurchase is deemed to be the date on
which redemption requests are received in proper form by ING Funds Distributor,
Inc., 1475 Dunwoody Drive, West Chester, Pennsylvania 19380. Redemption requests
received after 4 P.M., New York Time, will be deemed to have been repurchased on
the next business day. In the event a market is not maintained for the Units, a
Unitholder may be able to dispose of Units only by tendering them to the Trustee
for redemption.
Units purchased by the Sponsor in the secondary market may be reoffered for
sale by the Sponsor at a price based on the aggregate value of the Securities in
the Trust plus a 4.50% sales charge (or 4.712% of the net amount invested) plus
a pro rata portion of amounts, if any, in the Income Account. Any Units that are
purchased by the Sponsor in the secondary market also may be redeemed by the
Sponsor if it determines such redemption to be in its best interest.
The Sponsor may, under certain circumstances, as a service to Unitholders,
elect to purchase any Units tendered to the Trustee for redemption (see "Trustee
Redemption"). Factors which the Sponsor will consider in making a determination
will include the number of Units of all Trusts which it has in inventory, its
estimate of the salability and the time required to sell such Units and general
market conditions. For example, if in order to meet redemptions of Units the
Trustee must dispose of Securities, and if such disposition cannot be made by
the redemption date (three calendar days after tender), the Sponsor may elect to
purchase such Units. Such purchase shall be made by payment to the Unitholder
not later than the close of business on the redemption date of an amount equal
to the Redemption Price on the date of tender.
TRUSTEE REDEMPTION. At any time prior to the Evaluation Time on the
business day preceding the commencement of the Liquidation Period (approximately
seven years from the Initial Date of Deposit), Units may also be tendered to the
Trustee for redemption upon payment of any relevant tax by contacting the
Sponsor, broker, dealer or financial institution holding such Units in street
name. In certain instances, additional documents may be required, such as trust
instrument, certificate of corporate authority, certificate of death or
appointment as executor, administrator or guardian. At the present time there
are no specific taxes related to the redemption of Units. No redemption fee will
be charged by the Sponsor or the Trustee. Units redeemed by the Trustee will be
canceled.
Within three business days following a tender for redemption, the
Unitholder will be entitled to receive an amount for each Unit tendered equal to
the Redemption Price per Unit computed as of the Evaluation Time on the date of
tender. The "date of tender" is deemed to be the date on which Units are
received by the Trustee, except that
940432.2
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<PAGE>
with respect to Units received after the close of trading on the New York Stock
Exchange (4:00 p.m. Eastern Time), the date of tender is the next day on which
such Exchange is open for trading, and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the Redemption Price
computed on that day.
A Unitholder will receive his redemption proceeds in cash and amounts paid
on redemption shall be withdrawn from the Income Account, or, if the balance
therein is insufficient, from the Principal Account. All other amounts paid on
redemption shall be withdrawn from the Principal Account. The Trustee is
empowered to sell Securities in order to make funds available for redemptions.
Such sales, if required, could result in a sale of Securities by the Trustee at
a loss. To the extent Securities are sold, the size and diversity of the Trust
will be reduced. The Securities to be sold will be selected by the Trustee in
order to maintain, to the extent practicable, the proportionate relationship
among the number of shares of each Security. Provision is made in the Indenture
under which the Sponsor may, but need not, specify minimum amounts in which
blocks of Securities are to be sold in order to obtain the best price for the
Trust. While these minimum amounts may vary from time to time in accordance with
market conditions, the Sponsor believes that the minimum amounts which would be
specified would be approximately 100 shares for readily marketable Securities.
The Redemption Price per Unit is the pro rata share of the Unit in the
Trust determined by the Trustee on the basis of (i) the cash on hand in the
Trust or moneys in the process of being collected, (ii) the value of the
Securities in the Trust as determined by the Trustee, less (a) amounts
representing taxes or other governmental charges payable out of the Trust, (b)
the accrued expenses of the Trust and (c) cash allocated for the distribution to
Unitholders of record as of the business day prior to the evaluation being made.
As of the close of the initial offering period the Redemption Price per 100
Units will be reduced to reflect the payment of the per 100 Unit organization
costs to the Sponsor. Therefore, the amount of the Redemption Price per 100
Units received by a Unitholder will include the portion representing
organization costs only when such Units are tendered for redemption prior to the
close of the initial offering period. Because the Securities are listed on a
national securities exchange, the Trustee may determine the value of the
Securities in the Trust based on the closing sale prices on that exchange.
Unless the Trustee deems these prices inappropriate as a basis for evaluation or
if there is no such closing purchase price, then the Trustee may utilize, at the
Trust's expense, an independent evaluation service or services to ascertain the
values of the Securities. The independent evaluation service shall use any of
the following methods, or a combination thereof, which it deems appropriate: (a)
on the basis of current bid prices for comparable securities, (b) by appraising
the value of the Securities on the bid side of the market or (c) by any
combination of the above.
Any Unitholder tendering 2,500 Units or more of the Trust for redemption
may request by written notice submitted at the time of tender from the Trustee
in lieu of a cash redemption a distribution of shares of Securities and cash in
an amount and value equal to the Redemption Price Per Unit as determined as of
the evaluation next following tender. To the extent possible, in kind
distributions ("In Kind Distributions") shall be made by the Trustee through the
distribution of each of the Securities in book-entry form to the account of the
Unitholder's bank or broker-dealer at The Depository Trust Company. An In Kind
Distribution will be reduced by customary transfer and registration charges. The
tendering Unitholder will receive his pro rata number of whole shares of each of
the Securities comprising the Trust portfolio and cash from the Principal
Accounts equal to the balance of the Redemption Price to which the tendering
Unitholder is entitled. If funds in the Principal Account are insufficient to
cover the required cash distribution to the tendering Unitholder, the Trustee
may sell Securities in the manner described above.
The Trustee is irrevocably authorized in its discretion, if the Sponsor
does not elect to purchase a Unit tendered for redemption or if the Sponsor
tenders a Unit for redemption, in lieu of redeeming such Unit, to sell such Unit
in the over-the-counter market for the account of the tendering Unitholder at
prices which will return to the Unitholder an amount in cash, net after
deducting brokerage commissions, transfer taxes and other charges, equal to or
in excess of the Redemption Price for such Unit. The Trustee will pay the net
proceeds of any such sale to the Unitholder on the day he would otherwise be
entitled to receive payment of the Redemption Price.
940432.2
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<PAGE>
The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than customary weekend
and holiday closings, or trading on that Exchange is restricted or during which
(as determined by the Securities and Exchange Commission) an emergency exists as
a result of which disposal or evaluation of the Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange Commission
may by order permit. The Trustee and the Sponsor are not liable to any person or
in any way for any loss or damage which may result from any such suspension or
postponement.
A Unitholder who wishes to dispose of his Units should inquire of his bank
or broker in order to determine if there is a current secondary market price in
excess of the Redemption Price.
TRUST ADMINISTRATION
PORTFOLIO SUPERVISION. The Trust is a unit investment trust and is not a
managed fund. Traditional methods of investment management for a managed fund
typically involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. The Portfolio of the Trust, however,
will not be managed and therefore the adverse financial condition of an issuer
will not necessarily require the sale of its Securities from the portfolio. It
is unlikely that the Trust will sell any of the Securities other than to satisfy
redemptions of Units, or to cease buying Additional Securities in connection
with the issuance of additional Units. However, the Trust Agreement provides
that the Sponsor may direct the disposition of Securities upon the occurrence of
certain events including: (1) default in payment of amounts due on any of the
Securities; (2) institution of certain legal proceedings; (3) default under
certain documents materially and adversely affecting future declaration or
payment of amounts due or expected; (4) determination of the Sponsor that the
tax treatment of the Trust as a grantor trust would otherwise be jeopardized; or
(5) decline in price as a direct result of serious adverse credit factors
affecting the issuer of a Security which, in the opinion of the Sponsor, would
make the retention of the Security detrimental to the Trust or the Unitholders.
In addition, the Trust Agreement provides as follows:
(a) If a default in the payment of amounts due on any Security occurs
pursuant to provision (1) above and if the Sponsor fails to give immediate
instructions to sell or hold that Security, the Trustee, within 30 days of
that failure by the Sponsor, shall sell the Security.
(b) It is the responsibility of the Sponsor to instruct the Trustee to
reject any offer made by an issuer of any of the Securities to issue new
securities in exchange and substitution for any Security pursuant to a
recapitalization or reorganization. If any exchange or substitution is
effected notwithstanding such rejection, any securities or other property
received shall be promptly sold unless the Sponsor directs that it be
retained.
(c) Any property received by the Trustee after the Initial Date of
Deposit as a distribution on any of the Securities in a form other than
cash or additional shares of the Securities, shall be promptly sold unless
the Sponsor directs that it be retained by the Trustee. The proceeds of any
disposition shall be credited to the Income or Principal Account of the
Trust.
(d) The Sponsor is authorized to increase the size and number of Units
of the Trust by the deposit of Additional Securities, contracts to purchase
Additional Securities or cash or a letter of credit with instructions to
purchase Additional Securities in exchange for the corresponding number of
additional Units from time to time subsequent to the Initial Date of
Deposit, provided that the original proportionate relationship among the
number of shares of each Security established on the Initial Date of
Deposit is maintained to the extent practicable. The Sponsor may specify
the minimum numbers in which Additional Securities will be deposited or
purchased. If a deposit is not sufficient to acquire minimum amounts of
940432.2
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<PAGE>
each Security, Additional Securities may be acquired in the order of the
Security most under-represented immediately before the deposit when
compared to the original proportionate relationship. If Securities of an
issue originally deposited are unavailable at the time of the subsequent
deposit, the Sponsor may (i) deposit cash or a letter of credit with
instructions to purchase the Security when it becomes available, or (ii)
deposit (or instruct the Trustee to purchase) either Securities of one or
more other issues originally deposited or a Substitute Security.
In determining whether to dispose of or hold Securities, new securities or
property, the Sponsor may be advised by the Portfolio Supervisor.
TRUST AGREEMENT AND AMENDMENT. The Trust Agreement may be amended by the
Trustee and the Sponsor without the consent of Unitholders: (1) to cure any
ambiguity or to correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental agency; or (3)
to make such other provisions in regard to matters arising thereunder as shall
not adversely affect the interests of the Unitholders.
The Trust Agreement may also be amended in any respect, or performance of
any of the provisions thereof may be waived, with the consent of investors
holding 66 2/3% of the Units then outstanding for the purpose of modifying the
rights of Unitholders; provided that no such amendment or waiver shall reduce
any Unitholder's interest in the Trust without his consent or reduce the
percentage of Units required to consent to any such amendment or waiver without
the consent of the holders of all Units. The Trust Agreement may not be amended,
without the consent of the holders of all Units in the Trust then outstanding,
to increase the number of Units issuable or to permit the acquisition of any
Securities in addition to or in substitution for those initially deposited in
such Trust, except in accordance with the provisions of the Trust Agreement. The
Trustee shall promptly notify Unitholders, in writing, of the substance of any
such amendment.
TRUST TERMINATION. The Trust Agreement provides that the Trust shall
terminate as of the Evaluation Time on the business day preceding the
Liquidation Period or upon the earlier maturity, redemption or other
disposition, as the case may be, of the last of the Securities held in such
Trust and in no event is it to continue beyond the Mandatory Termination Date.
If the value of the Trust shall be less than the minimum amount set forth under
"Summary of Essential Information" in Part A, the Trustee may, in its
discretion, and shall, when so directed by the Sponsor, terminate the Trust. The
Trust may also be terminated at any time with the consent of the investors
holding 100% of the Units then outstanding. The Trustee may utilize the services
of the Sponsor for the sale of all or a portion of the Securities in the Trust,
and in so doing, the Sponsor will determine the manner, timing and execution of
the sales of the underlying Securities. Any brokerage commissions received by
the Sponsor from the Trust in connection with such sales will be in accordance
with applicable law. In the event of termination, written notice thereof will be
sent by the Trustee to all Unitholders. Such notice will provide Unitholders
with the following three options by which to receive their pro rata share of the
net asset value of the Trust and requires their election of one of the three
options by notifying the Trustee by returning a properly completed election
request (to be supplied to Unitholders of at least 2,500 Units prior to the
commencement of the Liquidation Period) (see Part A--"Summary of Essential
Information" for the date of the commencement of the Liquidation Period):
1. A Unitholder who owns at least 2,500 Units and whose interest in
the Trust would entitle it to receive at least one share of each underlying
Security will have its Units redeemed on commencement of the Liquidation
Period by distribution of the Unitholder's pro rata share of the net asset
value of the Trust on such date distributed in kind to the extent
represented by whole shares of underlying Securities and the balance in
cash within three business days next following the commencement of the
Liquidation Period. Unitholders subsequently selling such distributed
Securities will incur brokerage costs when disposing of such Securities.
Unitholders should consult their own tax adviser in this regard;
2. A Unitholder may elect to receive in cash such Unitholder's pro
rata share of the net asset value of the Trust derived from the sale by the
Sponsor as the agent of the Trustee of the underlying Securities
940432.2
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<PAGE>
during the Liquidation Period. The Unitholder's pro rata share of its net
assets of the Trust will be distributed to such Unitholder within three
days of the settlement of the trade of the last Security to be sold; or
3. A Unitholder may elect to invest such Unitholder's pro rata share
of the net assets of the Trust derived from the sale by the Sponsor as
agent of the Trustee of the underlying Securities during the Liquidation
Period, in units of a subsequent series of Equity Securities Trust (the
"New Series"), provided one is offered. It is expected that a special
redemption and liquidation will be made of all Units of this Trust held by
a Unitholder (a "Rollover Unitholder") who affirmatively notifies the
Trustee on or prior to the Rollover Notification Date set forth in the
"Summary of Essential Information" for the Trust in Part A. The Units of a
New Series will be purchased by the Unitholder within three business days
of the settlement of the trade for the last Security to be sold. Such
purchaser will be entitled to a reduced sales charge upon the purchase of
units of the New Series. It is expected that the terms of the New Series
will be substantially the same as the terms of the Trust described in this
Prospectus, and that similar options with respect to the termination of
such New Series will be available. The availability of this option does not
constitute a solicitation of an offer to purchase Units of a New Series or
any other security. A Unitholder's election to participate in this option
will be treated as an indication of interest only. At any time prior to the
purchase by the Unitholder of units of a New Series such Unitholder may
change his investment strategy and receive, in cash, the proceeds of the
sale of the Securities. An election of this option will not prevent the
Unitholder from recognizing taxable gain or loss (except in the case of a
loss, if and to the extent the New Series is treated as substantially
identical to the Trust) as a result of the liquidation, even though no cash
will be distributed to pay any taxes. Unitholders should consult their own
tax advisers in this regard.
Unitholders who do not make any election will be deemed to have elected to
receive the termination distribution in cash (option number 2).
The Sponsor has agreed that to the extent they effect the sales of
underlying securities for the Trustee in the case of the second and third
options during the Liquidation Period such sales will be free of brokerage
commissions. The Sponsor, on behalf of the Trustee, will sell, unless prevented
by unusual and unforeseen circumstances, such as, among other reasons, a
suspension in trading of a Security, the close of a stock exchange, outbreak of
hostilities and collapse of the economy, by the last business day of the
Liquidation Period. The Redemption Price per 100 Units, upon the settlement of
the last sale of Securities during the Liquidation Period, will be distributed
to Unitholders in redemption of such Unitholders' interest in the Trust.
Depending on the amount of proceeds to be invested in Units of the New
Series and the amount of other orders for Units in the New Series, the Sponsor
may purchase a large amount of securities for the New Series in a short period
of time. The Sponsor's buying of securities may tend to raise the market prices
of these securities. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the
Liquidation Period; depending on the number of sales required, the prices of and
demand for Securities, such sales may tend to depress the market prices and thus
reduce the proceeds of such sales. The Sponsor believes that the sale of
underlying Securities over the Liquidation Period as described above is in the
best interest of a Unitholder and may mitigate the negative market price
consequences stemming from the trading of large amounts of Securities. The
Securities may be sold in fewer than five days if, in the Sponsor's judgment,
such sales are in the best interest of Unitholders. The Sponsor, in implementing
such sales of securities on behalf of the Trustee, will seek to maximize the
sales proceeds and will act in the best interests of the Unitholders. There can
be no assurance, however, that any adverse price consequences of heavy trading
will be mitigated.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Unitholder. If the Sponsor so decides, the Sponsor will notify
the
940432.2
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<PAGE>
Trustee of that decision, and the Trustee will notify the Unitholders. All
Unitholders will then elect either option 1, if eligible, or option 2.
By electing to "rollover" into the New Series, the Unitholder indicates his
interest in having his terminating distribution from the Trust invested only in
the New Series created following termination of the Trust; the Sponsor expects,
however, that a similar rollover program will be offered with respect to all
subsequent series of the Trust, thus giving Unitholders an opportunity to elect
to roll their terminating distributions into a New Series. The availability of
the rollover privilege does not constitute a solicitation of offers to purchase
units of a New Series or any other security. A Unitholder's election to
participate in the rollover program will be treated as an indication of interest
only. The Sponsor intends to coordinate the date of deposit of a future series
so that the terminating trust will terminate contemporaneously with the creation
of a New Series. The Sponsor reserves the right to modify, suspend or terminate
the rollover privilege at any time.
THE SPONSOR. Effective February 9, 2000, ING Funds Distributor, Inc. has
become the successor to Reich & Tang Distributors, Inc., as Sponsor to the
Trusts. ING Funds Distributor, Inc., an Iowa corporation, is a wholly owned
indirect subsidiary of ING Group. ING Group, among the leading global financial
services organizations, is engaged in asset management, banking and insurance
activities in 60 countries worldwide with over 82,000 employees. The Sponsor is
a member of the National Association of Securities Dealers, Inc.
The information included herein is only for the purpose of informing
investors as to the financial responsibility of the Sponsor and its ability to
carry out its contractual obligations. The Sponsor will be under no liability to
Unitholders for taking any action, or refraining from taking any action, in good
faith pursuant to the Trust Agreement, or for errors in judgment except in cases
of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
The Sponsor may resign at any time by delivering to the Trustee an
instrument of resignation executed by the Sponsor. If at any time the Sponsor
shall resign or fail to perform any of its duties under the Trust Agreement or
becomes incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, then the Trustee may either (a) appoint a successor Sponsor;
(b) terminate the Trust Agreement and liquidate the Trust; or (c) continue to
act as Trustee without terminating the Trust Agreement. Any successor Sponsor
appointed by the Trustee shall be satisfactory to the Trustee and, at the time
of appointment, shall have a net worth of at least $1,000,000.
THE TRUSTEE. The Trustee is The Chase Manhattan Bank with its principal
executive office located at 270 Park Avenue, New York, New York 10017 (800)
428-8890 and its unit investment trust office at Four New York Plaza, New York,
New York 10004. The Trustee is subject to supervision by the Superintendent of
Banks of the State of New York, the Federal Deposit Insurance Corporation and
the Board of Governors of the Federal Reserve System.
The Trustee shall not be liable or responsible in any way for taking any
action, or for refraining from taking any action, in good faith pursuant to the
Trust Agreement, or for errors in judgment; or for any disposition of any
moneys, Securities or Units in accordance with the Trust Agreement, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties; provided, however, that the Trustee
shall not in any event be liable or responsible for any evaluation made by any
independent evaluation service employed by it. In addition, the Trustee shall
not be liable for any taxes or other governmental charges imposed upon or in
respect of the Securities or the Trust which it may be required to pay under
current or future law of the United States or any other taxing authority having
jurisdiction. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities pursuant to the
Trust Agreement.
For further information relating to the responsibilities of the Trustee under
the Trust Agreement, reference is made to the material set forth under "Rights
of Unitholders."
940432.2
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<PAGE>
The Trustee may resign by executing an instrument in writing and filing the
same with the Sponsor, and mailing a copy of a notice of resignation to all
Unitholders. In such an event the Sponsor is obligated to appoint a successor
Trustee as soon as possible. In addition, if the Trustee becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public authorities,
the Sponsor may remove the Trustee and appoint a successor as provided in the
Trust Agreement. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. If upon resignation of the Trustee no successor has
been appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of
the Trustee becomes effective only when the successor Trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor Trustee. Upon execution of a written acceptance of such appointment by
such successor Trustee, all the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.
Any corporation into which the Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Trustee shall be a party, shall be the successor Trustee. The
Trustee must always be a banking corporation organized under the laws of the
United States or any State and have at all times an aggregate capital, surplus
and undivided profits of not less than $2,500,000.
THE PORTFOLIO CONSULTANTS. The Portfolio Consultants are Thomas J. Herzfeld
Advisors, Inc., a Florida corporation with offices at P.O. Box 161465, Miami,
Florida 33116, and Riccardi Group LLC, a Delaware limited liability corporation
with offices at 340 Sunset Drive, Fort Lauderdale, Florida 33301. Thomas
Herzfeld, President of Thomas J. Herzfeld Advisors, Inc., will be primarily
responsible for the recommendation of the closed-end funds to the Sponsor. Mr.
Herzfeld is considered to be a foremost expert on closed-end funds. Mr. Herzfeld
publishes an "Encyclopedia of Closed End Funds" and has written books and
numerous articles on investing in closed-end funds. "Barrons" uses the "Herzfeld
Closed End Average" as the standard for tracking the performance of closed-end
funds.
Cynthia M. Brown, an officer and director of Riccardi Group LLC in
conjunction with Thomas Ryan, a director of Riccardi Group LLC will be
responsible for analyzing the credit quality and income sustainability of the
closed-end funds selected by Mr. Herzfeld and recommended to the Sponsor. Ms.
Brown is a former Senior Vice President and portfolio manager at Massachusetts
Financial Services. She was responsible for a number of portfolios totaling over
$2 billion which were comprised of primarily non-rated as well as investment
grade tax- exempt securities. Mr. Ryan is CEO of Riverside Capital Advisors of
Miami, Florida, and has over 25 years experience as a high yield analyst and
portfolio manager.
Neither Portfolio Consultant is a sponsor of the Trust. The Portfolio
Consultants have been retained by the Sponsor, at its expense. The Portfolio
Consultants' only responsibility with respect to the Trust, in addition to their
role in Portfolio selection, is to monitor the Securities of the Portfolio and
make recommendations to the Sponsor regarding the disposition of the Securities
held by the Trust. The responsibility of monitoring the Securities of the
Portfolio means that if the Portfolio Consultants' view materially changes
regarding the appropriateness of an investment in any Security then held in the
Trust based upon the investment objectives, guidelines, terms, parameters,
policies and restrictions supplied to the Portfolio Consultants by the Sponsor,
the Portfolio Consultants will notify the Sponsor of such change to the extent
consistent with applicable legal requirements. The Sponsor is not obligated to
adhere to the recommendations of the Portfolio Consultants regarding the
disposition of Securities. The Sponsor has the sole authority to direct the
Trust to dispose of Securities under the Trust Agreement. The Portfolio
Consultants have no other responsibilities or obligations to the Trust or the
Unitholders.
Each of the Portfolio Consultants may resign or may be removed by the
Sponsor at any time on sixty days' prior written notice. The Sponsor shall use
its best efforts to appoint a satisfactory successor in the event that either
Portfolio Consultant resigns or is removed. Such resignations or removals shall
become effective upon the acceptance of appointment by the successor Portfolio
Consultant. If upon resignation of both of the Portfolio Consultants no
successor has accepted appointment within sixty days after notice of
resignation, the Sponsor has
940432.2
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<PAGE>
agreed to perform this function. Thomas J. Herzfeld Advisors, Inc. may execute
principal transactions with the Trust and may also act as a broker in effecting
transactions for the Trust.
EVALUATION OF THE TRUST. The value of the Securities in the Trust portfolio
is determined in good faith by the Trustee on the basis set forth under "Public
Offering--Offering Price." The Sponsor and the Unitholders may rely on any
evaluation furnished by the Trustee and shall have no responsibility for the
accuracy thereof. Determinations by the Trustee under the Trust Agreement shall
be made in good faith upon the basis of the best information available to it,
provided, however, that the Trustee shall be under no liability to the Sponsor
or Unitholders for errors in judgment, except in cases of its own willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. The Trustee, the Sponsor and the Unitholders may rely on
any evaluation furnished to the Trustee by an independent evaluation service and
shall have no responsibility for the accuracy thereof.
TRUST EXPENSES AND CHARGES
ING Mutual Funds Management Co. LLC, an affiliate of ING Funds Distributor,
Inc., will receive for portfolio supervisory services to the Trust an Annual Fee
in the amount set forth under "Summary of Essential Information" in Part A. The
Sponsor's fee may exceed the actual cost of providing portfolio supervisory
services for the Trust, but at no time will the total amount received for
portfolio supervisory services rendered to all series of the Equity Securities
Trust in any calendar year exceed the aggregate cost to the Sponsor of supplying
such services in such year. (See "Portfolio Supervision.")
The Trustee will receive, for its ordinary recurring services to the Trust,
an annual fee in the amount set forth under "Summary of Essential Information"
in Part A. For a discussion of the services performed by the Trustee pursuant to
its obligations under the Trust Agreement, see "Trust Administration" and
"Rights of Unitholders."
The Trustee's fees applicable to a Trust are payable as of each Record Date
from the Income Account of the Trust to the extent funds are available and then
from the Principal Account. Both fees may be increased without approval of the
Unitholders by amounts not exceeding proportionate increases in consumer prices
for services as measured by the United States Department of Labor's Consumer
Price Index entitled "All Services Less Rent."
The following additional charges are or may be incurred by the Trust: all
expenses (including counsel fees) of the Trustee incurred and advances made in
connection with its activities under the Trust Agreement, including the expenses
and costs of any action undertaken by the Trustee to protect the Trust and the
rights and interests of the Unitholders; fees of the Trustee for any
extraordinary services performed under the Trust Agreement; indemnification of
the Trustee for any loss or liability accruing to it without gross negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with its acceptance or administration of the Trust; indemnification of the
Sponsor for any losses, liabilities and expenses incurred in acting as sponsors
of the Trust without gross negligence, bad faith or willful misconduct on its
part; and all taxes and other governmental charges imposed upon the Securities
or any part of the Trust (no such taxes or charges are being levied, made or, to
the knowledge of the Sponsor, contemplated). The above expenses, including the
Trustee's fees, when paid by or owing to the Trustee are secured by a first lien
on the Trust to which such expenses are charged. In addition, the Trustee is
empowered to sell the Securities in order to make funds available to pay all
expenses.
Unless the Sponsor otherwise directs, the accounts of the Trust shall be
audited not less than annually by independent public accountants selected by the
Sponsor. The expenses of the audit shall be an expense of the Trust. So long as
the Sponsor maintains a secondary market, the Sponsor will bear any audit
expense which exceeds $.50 Cents per 100 Units. Unitholders covered by the audit
during the year may receive a copy of the audited financial statements upon
request.
940432.2
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<PAGE>
REINVESTMENT PLAN
Income and principal distributions on Units (other than the final
distribution in connection with the termination of the Trust) may be reinvested
by participating in the Trust's reinvestment plan. Under the plan, the Units
acquired for participants will be either Units already held in inventory by the
Sponsor or new Units created by the Sponsor's deposit of Additional Securities
as described in "The Trust-Organization" in this Part B. Units acquired by
reinvestment will not be subject to any sales charge. Investors should inform
their broker, dealer or financial institution when purchasing their Units if
they wish to participate in the reinvestment plan. Thereafter, Unitholders
should contact their broker, dealer or financial institution if they wish to
modify or terminate their election to participate in the reinvestment plan. In
order to enable a Unitholder to participate in the reinvestment plan with
respect to a particular distribution on their Units, such notice must be made at
least three business days prior to the Record Day for such distribution. Each
subsequent distribution of income or principal on the participant's Units will
be automatically applied by the Trustee to purchase additional Units of the
Trust. The Sponsor reserves the right to modify or terminate the reinvestment
plan at any time without prior notice. The reinvestment plan for the Trust may
not be available in all states.
EXCHANGE PRIVILEGE AND CONVERSION OFFER
Unitholders will be able to elect to exchange any or all of their Units of
this Trust for Units of one or more of any available series of Equity Securities
Trust, Insured Municipal Securities Trust, Municipal Securities Trust, New York
Municipal Trust or Mortgage Securities Trust (the "Exchange Trusts") subject to
a reduced sales charge as set forth in the prospectus of the Exchange Trust (the
"Exchange Privilege"). Unit owners of any registered unit investment trust for
which there is no active secondary market in the units of such trust (a
"Redemption Trust") will be able to elect to redeem such units and apply the
proceeds of the redemption to the purchase of available Units of one or more
series of an Exchange Trust (the "Conversion Trusts") at the Public Offering
Price for units of the Conversion Trust subject to a reduced sales charge as set
forth in the prospectus of the Conversion Trust (the "Conversion Offer"). Under
the Exchange Privilege, the Sponsor's repurchase price during the initial
offering period of the Units being surrendered will be based on the market value
of the Securities in the Trust portfolio or on the aggregate offer price of the
Bonds in the other Trust Portfolios; and, after the initial offering period has
been completed, will be based on the aggregate bid price of the securities in
the particular Trust portfolio. Under the Conversion Offer, units of the
Redemption Trust must be tendered to the trustee of such trust for redemption at
the redemption price determined as set forth in the relevant Redemption Trust's
prospectus. Units in an Exchange or Conversion Trust will be sold to the
Unitholder at a price based on the aggregate offer price of the securities in
the Exchange or Conversion Trust portfolio (or for units of Equity Securities
Trust, based on the market value of the underlying securities in the trust
portfolio) during the initial public offering period of the Exchange or
Conversion Trust; and after the initial public offering period has been
completed, based on the aggregate bid price of the securities in the Exchange or
Conversion Trust Portfolio if its initial offering has been completed plus
accrued interest (or for units of Equity Securities Trust, based on the market
value of the underlying securities in the trust portfolio) and a reduced sales
charge.
Except for Unitholders who wish to exercise the Exchange Privilege or
Conversion Offer within the first five months of their purchase of Units of the
Exchange or Redemption Trust, any purchaser who purchases Units under the
Exchange Privilege or Conversion Offer will pay a lower sales charge than that
which would be paid for the Units by a new investor. For Unitholders who wish to
exercise the Exchange Privilege or Conversion Offer within the first five months
of their purchase of Units of the Exchange or Redemption Trust, the sales charge
applicable to the purchase of units of an Exchange or Conversion Trust shall be
the greater of (i) the reduced sales charge or (ii) an amount which when coupled
with the sales charge paid by the Unitholder upon his original purchase of Units
of the Exchange or Redemption Trust would equal the sales charge applicable in
the direct purchase of units of an Exchange or Conversion Trust.
940432.2
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<PAGE>
In order to exercise the Exchange Privilege the Sponsor must be maintaining
a secondary market in the units of the available Exchange Trust. The Conversion
Offer is limited only to unit owners of any Redemption Trust. Exercise of the
Exchange Privilege and the Conversion Offer by Unitholders is subject to the
following additional conditions (i) at the time of the Unitholder's election to
participate in the Exchange Privilege or the Conversion Offer, there must be
units of the Exchange or Conversion Trust available for sale, either under the
initial primary distribution or in the Sponsor's secondary market, (iii)
exchanges will be effected in whole units only, (iv) Units of the Mortgage
Securities Trust may only be acquired in blocks of 1,000 Units and (v) Units of
the Equity Securities Trust may only be acquired in blocks of 100 Units.
Unitholders will not be permitted to advance any funds in excess of their
redemption in order to complete the exchange. Any excess proceeds received from
a Unitholder for exchange, or from units being redeemed for conversion, will be
remitted to such Unitholder.
The Sponsor reserves the right to suspend, modify or terminate the Exchange
Privilege and/or the Conversion Offer. The Sponsor will provide Unitholders of
the Trust with 60 days' prior written notice of any termination or material
amendment to the Exchange Privilege or the Conversion Offer, provided that, no
notice need be given if (i) the only material effect of an amendment is to
reduce or eliminate the sales charge payable at the time of the exchange, to add
one or more series of the Trust eligible for the Exchange Privilege or the
Conversion Offer, to add any new unit investment trust sponsored by ING Funds
Distributor, Inc. or a sponsor controlled by or under common control with ING
Funds Distributor, Inc., or to delete a series which has been terminated from
eligibility for the Exchange Privilege or the Conversion Offer, (ii) there is a
suspension of the redemption of units of an Exchange or Conversion Trust under
Section 22(e) of the Investment Company Act of 1940, or (iii) an Exchange Trust
temporarily delays or ceases the sale of its units because it is unable to
invest amounts effectively in accordance with its investment objectives,
policies and restrictions. During the 60-day notice period prior to the
termination or material amendment of the Exchange Privilege described above, the
Sponsor will continue to maintain a secondary market in the units of all
Exchange Trusts that could be acquired by the affected Unitholders. Unitholders
may, during this 60-day period, exercise the Exchange Privilege in accordance
with its terms then in effect.
To exercise the Exchange Privilege, a Unitholder should notify the Sponsor
of his desire to exercise his Exchange Privilege. To exercise the Conversion
Offer, a unit owner of a Redemption Trust should notify his retail broker of his
desire to redeem his Redemption Trust Units and use the proceeds from the
redemption to purchase Units of one or more of the Conversion Trusts. If Units
of a designated, outstanding series of an Exchange or Conversion Trust are at
the time available for sale and such Units may lawfully be sold in the state in
which the Unitholder is a resident, the Unitholder will be provided with a
current prospectus or prospectuses relating to each Exchange or Conversion Trust
in which he indicates an interest. He may then select the Trust or Trusts into
which he desires to invest the proceeds from his sale of Units. The exchange
transaction will operate in a manner essentially identical to a secondary market
transaction except that units may be purchased at a reduced sales charge. The
conversion transaction will be handled entirely through the unit owner's retail
broker. The retail broker must tender the units to the trustee of the Redemption
Trust for redemption and then apply the proceeds to the redemption toward the
purchase of units of a Conversion Trust at a price based on the aggregate offer
or bid side evaluation per Unit of the Conversion Trust, depending on which
price is applicable, plus accrued interest and the applicable sales charge. The
certificates must be surrendered to the broker at the time the redemption order
is placed and the broker must specify to the Sponsor that the purchase of
Conversion Trust Units is being made pursuant to the Conversion Offer. The unit
owner's broker will be entitled to retain a portion of the sales charge.
TAX CONSEQUENCES OF THE EXCHANGE PRIVILEGE AND THE CONVERSION OFFER. A
surrender of Units pursuant to the Exchange Privilege or the Conversion Offer
will constitute a "taxable event" to the Unitholder under the Internal Revenue
Code. The Unitholder will realize a tax gain or loss that will be of a long- or
short-term capital or ordinary income nature depending on the length of time the
Units have been held and other factors. (See "Tax Status".) A Unitholder's tax
basis in the Units acquired pursuant to the Exchange Privilege or Conversion
Offer will be equal to the purchase price of such Units. Investors should
consult their own tax advisors as to the tax consequences to them of exchanging
or redeeming units and participating in the Exchange Privilege or Conversion
Offer.
940432.2
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<PAGE>
TAX STATUS
This is a general discussion of some of the Federal income tax consequences
of ownership of Units in the Trust. It applies only to investors who hold their
Units as capital assets. It does not discuss special rules that apply to
investors subject to special treatment, such as securities dealers, financial
institutions and insurance companies.
OPINION OF COUNSEL. In the opinion of Battle Fowler LLP:
1. The Trust will be classified as a grantor trust for Federal income tax
purposes and not as a partnership or association taxable as a corporation.
Classification of the Trust as grantor trusts will cause the Trust not to be
subject to Federal income tax and will cause the Unitholders of the Trust to be
treated for Federal income tax purposes as the owner of a pro rata portion of
the assets of the Trust. The income received by the Trust will be treated as
income of the Unitholders.
2. The Trust will not be subject to the New York Franchise Tax on Business
Corporations or the New York City General Corporation Tax. However, Unitholders
who are New York residents must treat their pro rata portion of the income of
the Trust as their income under New York State and City income tax laws.
Residents of other states may have to do the same thing in their states.
3. The Sponsor has reserved the right to create additional Units for 90
days after the original issuance date by depositing Additional Securities in the
Trust. The Additional Securities must be substantially similar to the securities
initially deposited in the Trust. This retained right falls within guidelines
promulgated by the IRS and should not affect the taxable status of the Trust.
Battle Fowler LLP is special counsel to the Sponsor. Its opinion is based
on existing law. Battle Fowler LLP has relied on the validity of the Trust
Agreement and the Prospectus and on the accuracy and completeness of the facts
they contain.
TAXATION OF UNITHOLDERS. The IRS will tax each Unitholder the same way it
would if the Unitholder owned directly its pro rata share of the securities held
by the Trust. Each Unitholder will determine its tax cost for its share of the
securities held by the Trust by allocating its cost of the Units (including
sales charges) among its share of the securities held by the Trust in proportion
to the fair market values of those securities on the date the Unitholder
purchases its Units. See "Fractional Undivided Interest in Trust" in the
"Summary of Essential Information" in order to determine a Unitholder's share of
each security on the date of Deposit, and see "Cost of Securities to Trust"
under "Portfolio" in order to determine the fair market value of each security
on that date.
The Trust will own shares of regulated investment companies (referred to
herein as the "High Yield Funds") that own high-yield corporate debt
instruments. The IRS will treat each Unitholder as receiving its share of the
ordinary dividends and capital gain dividends on the shares of the High Yield
Funds held by Trust, when the Trust receives those items, unless the Unitholder
has an accounting method that requires an earlier accrual. A Unitholder may
treat its share of capital gains dividends received by the Trust as capital
gains dividends received by it. A Unitholder will be taxed on its distributions
from the Trust whether it receives them in cash or reinvests them in additional
Units through the Reinvestment Plan.
Each Unitholder will generally have to calculate its gain or loss when the
Trust sells, exchanges or redeems shares in a High Yield Funds or when the
Unitholder sells, exchanges or redeems Units. Any gain will generally be a
capital gain and will be long-term if the Unitholder has held its Units for more
than one year and the Trust has held the shares in the High Yield Funds for more
than one year. A Unitholder's share of capital gains dividends received by the
Trust from the High Yield Funds will also be long-term capital gain, regardless
of the period of time for which the Unitholder has held its Units or the period
of time for which the Trust has held the shares in the High Yield Funds. Capital
gains are generally taxed at the same rates applicable to ordinary income,
although non-
940432.2
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<PAGE>
corporate Unitholders may be subject to a reduced tax rate of 20%
on long-term capital gains. Tax rates may increase before the Trust sells shares
in the High Yield Funds or the Unitholders sell Units.
Any loss on the sale or redemption of Units or share in the High Yield
Funds will generally be a capital loss, and will be long-term for Unitholders
who have held their Units for more than one year if the Trust has also held the
shares in the High Yield Funds for more than one year and short-term capital
gain or loss if the Trust has held the shares, or the Unitholder has held the
Units for one year or less. Capital losses are deductible to the extent of
capital gains. In addition, Unitholders that are not corporations may deduct up
to $3,000 of capital losses (married individuals filing separately may only
deduct $1,500) against ordinary income. However, if the Trust buys shares and
sells them at a loss within six months (or if the Unitholder buys Units and
sells them at a loss within six months), the loss will be treated as long-term,
rather than short-term capital loss if (and to the extent that) the Trust
received any capital gains dividends with respect to those shares.
Unitholders will also not be able to deduct losses resulting from the sale
of shares or the sale of Units if (and to the extent that) the Unitholder
purchases other shares or other Units within 30 days before or after the sale.
This rule could also apply to a transaction in which a Unitholder sell Units or
the Trust sells shares of a High Yield Funds, and the Unitholder purchases
shares of that same High Yield Fund directly within the 60 days period. If this
disallowance rule applies, the basis of the newly purchased Units and shares
will be adjusted to reflect the disallowed loss.
A Unitholder who itemizes its deductions may also deduct its pro rata share
of the fees and expenses of a Trust, but only to the extent that such amounts,
together with the Unitholder's other miscellaneous deductions, exceed 2% of its
adjusted gross income. The deduction of fees and expenses is subject to
limitations for individuals with incomes in excess of certain thresholds.
The Trustee will give each Unitholder an annual statement showing the
dividends and capital gains dividends received by the Trust, the gross proceeds
received by the Trust from the disposition of any shares in the High Yield
Funds, and any other income and fees and expenses of the Trust. The Trustee will
also give an annual information return to each Unitholder and send copies of
those returns to the Internal Revenue Service.
Each Unitholder may have three choices when the Trust terminates. First, a
Unitholder who owns at least 2,500 units may have the Trust distribute its share
of the shares of the High Yield Funds in kind (plus cash in lieu of fractional
shares). Second, a Unitholder can have the Trust sell its share of the shares of
the High Yield Funds and distribute the cash. Third, a Unitholder can reinvest
the cash it would have received in units of a future series of the Trust (if one
is offered). A Unitholder who asks the Trust to distribute its share of the
shares of the High Yield Funds (plus cash for fractional shares) should not be
taxed when the shares of the High Yield Funds are distributed to it, although
the cash should be taxable. However, there is no specific authority covering
this issue.
TAXATION OF THE HIGH YIELD FUNDS. The High Yield Funds have elected and
intend to continue to elect to qualify to be treated as regulated investment
companies for Federal income tax purposes. If they qualify, the High Yield Funds
will not be subject to Federal income tax on the income they distribute to their
shareholders, including the Trust.
In order to qualify as a regulated investment company, a High Yield Fund
must distribute each year at least 90% of its investment company taxable income
(including, generally, taxable interest, dividends, net short-term capital
gains, and certain other income, less certain expenses, and must meet several
additional requirements. A High Yield Fund that does not qualify as a regulated
investment company will be taxed on its taxable income and capital gains; and
all distributions to its shareholders, including distributions of net long-term
capital gains, will be taxable as ordinary income.
940432.2
B-23
<PAGE>
The High Yield Funds may have to accrue and distribute income not yet
received if they invest in Bonds issued at a discount. The High Yield Funds may
be required to sell Bonds that they otherwise would have continued to hold in
order to generate sufficient cash to make this distribution.
The High Yield Funds intend to distribute enough of their income to avoid
the 4% excise tax imposed on regulated investment companies that do not
distribute at least 98% of their taxable income.
TAXATION OF THE TRUST AS A SHAREHOLDER OF THE HIGH YIELD FUNDS. Dividends
from the High Yield Funds' investment company taxable income generally are
taxable to Unitholders as ordinary income to the extent of the High Yield Funds'
earnings and profits. Distributions of the High Yield Funds' net capital gain,
when designated as such, are taxable to Unitholders as long-term capital gain,
regardless of how long they have held their Units. Distributions by the High
Yield Funds to Unitholders in any year that exceed the High Yield Funds'
earnings and profits generally may be applied by each Unitholder against his or
her basis for the High Yield Funds' shares and will be taxable as long-term or
short-term, depending on the Unitholder's and the Trust's holding period,
capital gains (assuming the High Yield Funds' shares are held as a capital
asset) to any Unitholder to the extent the distributions to the Unitholder
exceed the Unitholder's basis for his or her shares. The High Yield Funds may
retain for investment their net capital gain. However, if a High Yield Fund does
so, it will be subject to tax on the amount retained. In that event, the High
Yield Funds may designate the retained amount as undistributed capital gain in a
notice to their Unitholders, who (i) will be required to include in income for
tax purposes, as long- term capital gain, their proportionate shares of such
undistributed amount, (ii) will be entitled to credit their proportionate shares
of the tax paid by the High Yield Fund against their federal income tax
liabilities, if any, and to claim refunds to the extent the credit exceeds those
liabilities, and (iii) will increase the tax basis of their shares by an amount
equal to the difference between the amount of undistributed capital gain
included in their gross income and the tax deemed paid.
The High Yield Funds may acquire zero coupon or other securities issued
with original issue discount. As the holders of such securities, the High Yield
Funds must include in their gross income the original issue discount that
accrues on the securities during the taxable year, even if they receive no
corresponding payment on the securities during the year. The High Yield Funds
also must include in their gross income each year any "interest" distributed in
the form of additional securities on payment-in-kind securities. Because the
High Yield Funds annually must distribute substantially all of their investment
company taxable income, including any accrued original issue discount and other
non-cash income, to satisfy the distribution requirement and to avoid imposition
of the excise tax, the High Yield Funds may be required in a particular year to
distribute as a dividend an amount that is greater than the total amount of cash
they actually receive. Those distributions will be made from the High Yield
Funds' cash assets or from the proceeds of sales of portfolio securities, if
necessary. The High Yield Funds may recognize capital gains or losses from those
sales, which would increase or decrease their investment company taxable income
and/or net capital gain.
The use of certain derivatives, such as selling (writing) and purchasing
options and futures and entering into forward currency contracts, involves
complex rules that will determine for federal income tax purposes the amount,
character and timing of recognition of the gains and losses the High Yield Funds
realize in connection therewith. These rules also may require the High Yield
Funds to "mark to market" (that is, treat as sold for their fair market value)
at the end of each taxable year certain positions in their portfolios, which may
cause the High Yield Funds to recognize income or gain without receiving cash
with which to make distributions necessary to satisfy the distribution
requirement and to avoid imposition of the excise tax.
Foreign currency gains or losses from certain forward contracts not traded
in the interbank market as well as certain other gains or losses attributable to
currency exchange rate fluctuations are typically treated as ordinary income or
loss. Such income or loss may increase or decrease (or possibly eliminate) the
High Yield Funds' income available for distribution. If, under the rules
governing the tax treatment of foreign currency gain and losses, the High Yield
Funds' income available for distribution is decreased or eliminated, all or a
portion of the distributions
940432.2
B-24
<PAGE>
by the High Yield Funds may be treated for federal income tax purposes as a
return of capital or, in some circumstances, as capital gain.
Income received by the High Yield Funds from investments in foreign
securities may be subject to income, withholding or other taxes imposed by
foreign countries and U.S. possessions. Such taxes will not be deductible or
creditable by Shareholders. Tax conventions between certain countries and the
United States may reduce or eliminate those taxes.
If the High Yield Fund has an "appreciated financial position" generally,
an interest (including an interest through an option, futures or forward
currency contract, or short sale) with respect to any stock, debt instrument
(other than "straight debt") or partnership interest the fair market value of
which exceeds its adjusted basis and enters into a "constructive sale" of the
same or substantially similar property, the High Yield Fund will be treated as
having made an actual sale thereof, with the result that gain will be recognized
at that time. A constructive sale generally consists of a short sale, an
offsetting notional principal contract or futures or forward currency contract
entered into by the High Yield Fund or a related person with respect to the same
or substantially similar property. In addition, if the appreciated financial
position is itself a short sale or such a contract, acquisition of the
underlying property or substantially similar property will be deemed a
constructive sale.
A Unitholder will generally have a taxable gain or loss when it sells
Units, when the Trust sells shares of the High Yield Funds, and when the High
Yield Funds sell Securities and distribute capital gains dividends. The gain or
loss will generally be capital gain or capital loss if the Units are capital
assets for the Unitholders. Unitholders will also generally have ordinary income
if the High Yield Funds sell or redeem Securities that were acquired at a market
discount, or sell Securities at a short term capital gain, and distribute
ordinary dividends. In general, the IRS will treat Securities as market discount
Securities when the cost of the Security, plus any original issue discount that
has not yet accrued, is less than the amount due to be paid at the maturity of
the Security. The IRS taxes all or a portion of the gain on the sale of a market
discount Security as ordinary income when the Security is sold, redeemed or
paid. The portion of the gain taxed by the IRS as ordinary income is equal to
the portion of the market discount that has accrued since the seller purchased
the Security.
Distributions made by the High Yield Funds will not qualify for the
corporate dividends-received deduction.
If the High Yield Funds declare dividends in October, November or December
that are payable to shareholders of record on a date during those months,
Unitholders must take the dividends into account for tax purposes in the current
year, if the dividend is paid either in the current year, or in January of the
following year.
Ordinary and capital gain dividends will be taxable as described above
whether received in cash or reinvested in additional Units under the
Reinvestment Plan. A Unitholder whose distributions are reinvested in additional
Units under the Reinvestment Plan will be treated as having received the amount
of cash allocated to the Unitholder for the purchase of those Units.
An investor should be aware that, if Units are purchased shortly before the
record date for any dividend or other distribution from a High Yield Fund, the
investor will pay full price for the Units and will receive some portion of the
purchase price back as a taxable distribution.
BACKUP WITHHOLDING. The Trust generally must withhold and pay over to the
U.S. Treasury 31% of the taxable dividends and other distributions paid to any
individual Unitholder who either does not supply its taxpayer identification
number, has not reported all of its dividends and interest income, or does not
certify to the Trust that he or she is not subject to withholding. The social
security number of an individual is its taxpayer identification number.
940432.2
B-25
<PAGE>
TAX-EXEMPT ENTITIES. Entities that generally qualify for an exemption from
Federal income tax, such as many pension trusts, are nevertheless taxed under
Section 511 of the Code on "unrelated business taxable income." Unrelated
business taxable income is income from a trade or business regularly carried on
by the tax- exempt entity that is unrelated to the entity's exempt purpose.
Unrelated business taxable income generally does not include dividend or
interest income or gain from the sale of investment property, unless such income
is derived from property that is debt-financed or is dealer property. A
tax-exempt entity's dividend income from the Trust and gain from the sale of
Units in the Trust or from the Trust's sale of Securities is not expected to
constitute unrelated business taxable income to such tax-exempt entity unless
the acquisition of the Unit itself is debt-financed or constitutes dealer
property in the hands of the tax-exempt entity.
Before investing in the Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit-sharing retirement plan) should
consider among other things (a) whether the investment is prudent under the
Employee Retirement Income Security Act of 1974 ("ERISA"), taking into account
the needs of the plan and all of the facts and circumstances of the investment
in the Trust, including the fact that the Trust is intended to generate tax
exempt income; (b) whether the investment satisfies the diversification
requirement of Section 404(a)(1)(C) of ERISA; and (c) whether the assets of the
Trust are deemed "plan assets" under ERISA and the Department of Labor
regulations regarding the definition of "plan assets."
Prospective tax-exempt investors are urged to consult their own tax
advisers concerning the Federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units prior to investing in the
Trust.
STATE AND LOCAL TAXES. Unitholders may have to pay state and local tax on
their share of ordinary dividends and capital gain dividends paid by the High
Yield Funds.
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units offered hereby and certain
matters relating to federal tax law have been passed upon by Battle Fowler LLP,
75 East 55th Street, New York, New York 10022 as counsel for the Sponsor.
Carter, Ledyard & Milburn, Two Wall Street, New York, New York 10005 have acted
as counsel for the Trustee.
INDEPENDENT ACCOUNTANTS/AUDITORS. The financial statements of the Trust
for the period ended December 31, 1999 included in Part A of this Prospectus
have been examined by Ernst & Young LLP, independent auditors. The financial
statements have been so included in reliance on their report given upon the
authority of said firm as experts in accounting and auditing.
PORTFOLIO SUPERVISOR. ING Mutual Funds Management Co. LLC, a Delaware
limited liability company, is a wholly-owned indirect subsidiary of ING Group
and is an affiliate of the Sponsor.
PERFORMANCE INFORMATION. Total returns, average annualized returns or
cumulative returns for various periods of the High Yield Funds and this Trust
may be included from time to time in advertisements, sales literature and
reports to current or prospective investors. Total return shows changes in Unit
price during the period plus reinvestment of dividends and capital gains,
divided by the maximum public offering price as of the date of calculation.
Average annualized returns show the average return for stated periods of longer
than a year. Figures for actual portfolios will reflect all applicable expenses
and, unless otherwise stated, the maximum sales charge. No provision is made for
any income taxes payable. Similar figures may be given for this Trust. Trust
performance may be compared to performance on a total return basis of the Dow
Jones Industrial Average, the S&P 500 Composite Price Stock Index, or
performance data from Lipper Analytical Services, Inc. and Morningstar
Publications, Inc. or from publications such as Money, The New York Times, U.S.
News and World Report, Business Week, Forbes or Fortune. As with other
performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.
940432.2
B-26
<PAGE>
No person is authorized to give any information or to make any
representations with respect to this Trust not contained in Parts A and B of
this Prospectus and you should not rely on any other information. The Trust is
registered as a unit investment trust under the Investment Company Act of 1940.
Such registration does not imply that the Trust or any of its Units have been
guaranteed, sponsored, recommended or approved by the United States or any state
or any agency or officer thereof.
----------
This Prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy, securities in any state to any person to whom it is not lawful
to make such offer in such state.
Table of Contents
Title Page
PART A
The Trust..................................... A-2
Summary of Essential Information.............. A-4
Fee Table..................................... A-5
Financial and Statistical Information......... A-6
Audit and Financial Information............... A-8
PART B
The Trust..................................... B-1
Risk Considerations........................... B-3
Public Offering............................... B-8
Rights of Unitholders......................... B-10
Liquidity..................................... B-12
Trust Administration.......................... B-14
Trust Expenses and Charges.................... B-19
Reinvestment Plan............................. B-20
Exchange Privilege and Conversion Offer....... B-20
Tax Status.................................... B-22
Other Matters................................. B-26
940432.2
B-27
<PAGE>
LOGO
EQUITY SECURITIES TRUST
SERIES 22
HIGH YIELD SYMPHONY SERIES
(A UNIT INVESTMENT TRUST)
PROSPECTUS
DATED: April 30, 2000
SPONSOR:
ING FUNDS DISTRIBUTOR, INC.
1475 Dunwoody Drive
West Chester, Pennsylvania 19380
1-877-463-6464
TRUSTEE:
THE CHASE MANHATTAN BANK
4 New York Plaza
New York, New York 10004
This Prospectus does not contain all of the information set forth in the
registration statement, filed with the SEC, Washington, D.C., under the
Securities Act of 1933 (file no. 333-31048), and the Investment Company Act of
1940 (file no. 811-08945), and to which reference is made.
Information may be reviewed and copied at the Commission's Public Reference
Room, and information on the Public Reference Room may be obtained by calling
the SEC at 1-202-942-8090. Copies may be obtained from the SEC by:
o visiting the SEC Internet address: http://www.sec.gov
o electronic request (after paying a duplicating fee) at the following E-mail
address: [email protected]
o writing: Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549-6009
940432.2
<PAGE>
PART II
ADDITIONAL INFORMATION NOT REQUIRED
IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Registration
Statement of Equity Securities Trust, Series 12, 1997 Triple Strategy Trust
II.
The Prospectus consisting of pages.
Signatures.
Consent of Independent Auditors.
Consent of Counsel (included in Exhibit 99.3.1).
Consents of Portfolio Consultants
The following exhibits:
99.1.1 -- Reference Trust Agreement including certain amendments to the
Trust Indenture and Agreement (filed as Exhibit 99.1.1 to
Amendment No. 2 to Form S-6 Registration Statement No.
333-69255 of Equity Securities Trust, Series 22 on March 11,
1999 and incorporated herein by reference).
99.1.1.1 -- Form of Trust Indenture and Agreement (filed as Exhibit
99.1.1.1 to Amendment No. 1 to Form S-6 Registration Statement
No. 33-62627 of Equity Securities Trust, Series 6 on November
16, 1995 and incorporated herein by reference).
99.1.3.4 -- Articles of Incorporation and Articles of Amendment of ING
Funds Distributor, Inc. (filed as Exhibit 99.1.3.5 to Amendment
No. 2 to Form S-6 Registration Statement No. 333-31048 on March
28, 2000 and incorporated herein by reference).
99.1.3.5 -- By-Laws of ING Funds Distributor, Inc. (filed as Exhibit
99.1.3.6 to Amendment No. 2 to Form S-6 Registration Statement
No. 333-31048 on March 28, 2000 and incorporated herein by
reference).
99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 1.4 to
Amendment No. 1 to Form S-6 Registration Statement No. 33-62627
of Equity Securities Trust, Series 6, Signature Series, Gabelli
Entertainment and Media Trust on November 16, 1995 and
incorporated herein by reference).
99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and to the use of their name under the headings
"Tax Status" and "Legal Opinions" in the Prospectus, and to the
filing of their opinion regarding tax status of the Trust
(filed as Exhibit 99.3.1 to Amendment No. 2 to Form S-6
Registration Statement No. 333-69255 of Equity Securities
Trust, Series 22 on March 11, 1999 and incorporated herein by
reference).
99.6.0 -- Powers of Attorney of ING Funds Distributor, Inc., by its
officers and a majority of its Directors (filed as Exhibit
99.6.0 to Form S-6 Registration Statement No. 333-31048 on
February 24, 2000 and incorporated herein by reference).
II-1
935901.1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant, Equity Securities Trust, Series 22, High Yield Symphony Series
certifies that it has met all of the requirements for effectiveness of this
Post-Effective Amendment to the Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933. The registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 19th day of April, 2000.
EQUITY SECURITIES TRUST, SERIES 22, HIGH YIELD SYMPHONY SERIES
(Registrant)
ING FUNDS DISTRIBUTOR, INC.
(Depositor)
By: /S/ PETER J. DEMARCO
---------------------
Peter J. DeMarco
(Senior Vice President)
Pursuant to the requirements of the Securities Act of 1933,
this Post- Effective Amendment to the Registration Statement has been signed
below by the following persons, who constitute the principal officers and a
majority of the directors of ING Funds Distributor, Inc., the Depositor, in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
JOHN J. PILEGGI Chief Executive Officer and Director )
MITCHELL J. MELLEN President and Director ) April 19, 2000
DONALD E. BROSTROM Chief Financial Officer, Treasurer )
and Director )
ERIC M. RUBIN Director ) By:/S/PETER J.DEMARCO
------------------
Peter J. DeMarco
as Senior Vice
President and
Attorney-in-Fact*
</TABLE>
- --------
* Executed copies of Powers of Attorney were filed as Exhibit 99.6.0 to Form
S-6 Registration Statement No. 333-31048 on February 24, 2000.
II-2
935901.1
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated April 15, 2000, in the Registration Statement
and related Prospectus of Equity Securities Trust, Series 22, High Yield
Symphony Series.
ERNST & YOUNG LLP
New York, New York
April 25, 2000
<PAGE>
II-3
935901.1
<PAGE>
CONSENT OF PORTFOLIO CONSULTANTS
THE SPONSOR, TRUSTEE AND UNITHOLDERS
EQUITY SECURITIES TRUST, SERIES 22,
HIGH YIELD SYMPHONY SERIES
We hereby consent to the use of the name "Riccardi Group LLC" included
herein and to the reference to our firm in the Prospectus.
RICCARDI GROUP LLC
Fort Lauderdale, Florida
April 2000
II-4
935901.1
<PAGE>
THE SPONSOR, TRUSTEE AND UNITHOLDERS
EQUITY SECURITIES TRUST, SERIES 22
HIGH YIELD SYMPHONY SERIES
We hereby consent to the use of the name "Thomas J. Herzfeld Advisors,
Inc." included herein and to the reference to our firm in the Prospectus.
THOMAS J. HERZFELD ADVISORS, INC.
New York, New York
April 2000
II-5
935901.1
